Of course, here is a detailed and lengthy post on reconciling in QuickBooks with a step-by-step guide.
How to Reconcile in Intuit QuickBooks: A Complete Step-by-Step Guide
Hey there! Ever looked at your bank statement and wondered if every single transaction in your QuickBooks matches up perfectly? If you're nodding your head, you're in the right place. Reconciling your accounts in QuickBooks is like being a detective for your finances—it's a critical step to ensure your books are accurate, catch errors, and have a clear picture of your business's financial health.
Ready to become a reconciliation pro? Let's dive in!
Step 1: Get Your Bank Statement Ready
Before you even think about opening QuickBooks, the very first and most important step is to have your bank or credit card statement in front of you. You can't start this process without it!
Gather Your Statement: Get the statement for the account you want to reconcile (checking, savings, credit card, etc.). Make sure it's for the specific period you're working on. For example, if you're reconciling for May, you need the statement that covers the period from May 1st to May 31st.
Identify Key Information: On your statement, find these three crucial pieces of information:
Beginning Balance: The balance of your account at the start of the statement period.
Ending Balance: The balance of your account at the end of the statement period.
Ending Date: The last day of the statement period.
Don't skip this step! Having your statement ready and knowing these figures will make the rest of the process smooth and painless.
Step 2: Start the Reconciliation Process in QuickBooks
Now that you have your statement, it's time to log into your QuickBooks account.
Navigate to the Reconciliation Screen:
In QuickBooks Online: Go to the Accounting tab from the left navigation menu and then click on Reconcile.
In QuickBooks Desktop: Go to the Banking menu and select Reconcile.
Choose the Account to Reconcile: From the dropdown menu, select the bank or credit card account you want to reconcile. Make sure you choose the correct one!
Step 3: Enter Your Statement Information
This is where you'll input the information you gathered in Step 1.
Enter the Ending Balance: In the field for "Ending Balance," type the exact ending balance from your bank statement. A single typo here will throw off your entire reconciliation.
Enter the Ending Date: Enter the ending date of your statement.
Enter the Beginning Balance: QuickBooks will typically pre-fill the beginning balance from the last reconciliation. Double-check that this matches the beginning balance on your bank statement. If it doesn't, it means a previous reconciliation wasn't completed correctly or a transaction was changed after it was reconciled. If they don't match, you need to find the discrepancy before moving on.
Step 4: The Fun Part - Matching Transactions!
This is the core of the reconciliation process. QuickBooks will show you a list of all the transactions in your books for the period. Your job is to compare them to your bank statement and check them off.
Match Deposits and Credits: Look at the "Deposits and other credits" section in QuickBooks. For every deposit on your bank statement, find the corresponding transaction in QuickBooks and click the circle next to it to put a checkmark.
Pro Tip: If you have a long list, you can sort the transactions by date or amount to make it easier to find matches.
Match Payments and Withdrawals: Now, do the same for the "Checks and Payments" section. Go through your bank statement and check off every payment, withdrawal, check, and fee that appears on both your statement and in QuickBooks.
What to Look For:
Cleared Transactions: A "cleared" transaction is one that has been processed by your bank. As you check off items, you are telling QuickBooks that they have cleared the bank.
Bank Service Charges: Don't forget about bank service fees or interest earned! These will be on your bank statement but likely not in QuickBooks yet.
Missing Transactions: If a transaction is on your bank statement but not in QuickBooks, you need to enter it now. For example, if your bank charged a monthly fee, you need to enter a journal entry or expense for it.
Incorrect Amounts: If you find a transaction in QuickBooks with a different amount than what's on your statement, do not check it off. You need to correct the amount in QuickBooks before you can proceed.
Step 5: The Magic Number - The Difference
As you check off transactions, look at the "Difference" amount in the top right corner of the reconciliation screen.
The Goal: The ultimate goal is for the "Difference" to be zero. This means that every transaction on your bank statement for that period has been accounted for in your QuickBooks, and your balances match.
If the Difference is Zero: Congratulations! You can now click the "Finish Now" or "Reconcile Now" button. You've successfully reconciled your account!
If the Difference is Not Zero: Don't panic! This is a common situation. It simply means there's a discrepancy.
Step 6: Troubleshooting Discrepancies
If your difference is not zero, you need to find the error. Here’s your detective checklist:
Double-check the Ending Balance and Date: Is the ending balance you entered exactly the same as your bank statement? A single digit can be the culprit.
Look for Missing Transactions: Go back through your bank statement, line by line, and compare it to the checked items in QuickBooks. Did you miss checking off a transaction? Did you forget to enter a transaction like a bank fee or interest income?
Check for Incorrect Amounts: Scan the checked transactions in QuickBooks. Is there a transaction with a typo in the amount? For example, did you enter $125 instead of $152?
Look for Duplicates: Did you accidentally enter the same transaction twice?
Examine the Beginning Balance: If the beginning balance in QuickBooks doesn't match your statement, you need to find out what changed from the previous reconciliation. This is the hardest discrepancy to fix. You might need to check the reconciliation report from the previous month to see what was changed after it was reconciled.
Once you find and fix the error, the difference should go to zero.
Step 7: Finish the Reconciliation
Once the difference is zero, click "Finish Now" or "Reconcile Now". QuickBooks will then generate a reconciliation report.
Save the Report: It's a good practice to save or print this report for your records. It's an official record that your books match your bank account as of that date.
You have now successfully reconciled your account in QuickBooks! By doing this monthly, you'll catch errors early and maintain clean and accurate financial records.
10 Related FAQs: Quick Answers
How to find the reconciliation report in QuickBooks?
You can find reconciliation reports in QuickBooks Online by going to Reports, then searching for "Reconciliation Reports." In QuickBooks Desktop, go to the Reports menu, select Banking, and then Previous Reconciliation.
How to fix a beginning balance discrepancy in QuickBooks?
A beginning balance discrepancy means a transaction was changed or deleted after a previous reconciliation. To fix it, you'll need to go back to the prior reconciliation report and find the changed transaction. You may need to "undo" the change or enter a correction.
How to handle bank fees during reconciliation?
When you see a bank fee on your statement, you need to enter it as an expense in QuickBooks. Do this from the reconciliation screen. Once entered, it will appear in the transaction list and you can check it off.
How to reconcile a credit card account in QuickBooks?
Reconciling a credit card is the same process as a bank account. Use your credit card statement's ending balance and date. Payments you made will be "credits" and your charges will be "payments."
How to unreconcile a transaction in QuickBooks?
In QuickBooks Online, you can go to the transaction in the register and click on the "R" (reconciled) status to change it back to a "C" (cleared) or blank status. In Desktop, you'll need to open the transaction and change its status.
How to reconcile a petty cash account in QuickBooks?
For petty cash, you don't have a bank statement. Instead, you reconcile it to your physical cash on hand. Count the cash and coins you have and use that as your "ending balance" for the reconciliation.
How to fix a reconciliation with a difference?
To fix a reconciliation with a difference, follow the troubleshooting steps in Step 6: check the ending balance, look for missing or duplicated transactions, and verify the amounts. The goal is to get the difference to zero.
How to deal with checks that haven't cleared the bank?
If a check you wrote hasn't appeared on your bank statement yet, simply do not check it off during reconciliation. It will remain "uncleared" in QuickBooks and will show up in your next reconciliation's list of outstanding transactions.
How to manually add missing transactions during reconciliation?
If a transaction is on your statement but not in QuickBooks, you can add it directly from the reconciliation screen. QuickBooks Online has an "Add" button, or you can open a new window to enter the transaction and then refresh your reconciliation screen.
How to check a previous reconciliation history?
In QuickBooks, you can view the history of your reconciliations. In QuickBooks Online, go to the Reconcile screen and click on "History by account." In QuickBooks Desktop, go to the Reports menu and select Previous Reconciliation.
