You should reconcile your bank and credit card accounts at least once a month, when you get your statement. Complete it shortly after getting your statement so you can identify and follow up on discrepancies in a timely fashion. (Note: some of the language in this post is specific to bank activity, but the reconciliation function works the same for credit cards. You can select which account you’re reconciling when you’re in the Chart of Accounts.)
To start a reconciliation, go to the Chart of Accounts by clicking on the Accounting menu on the left side of the screen. To the right of the account you’re working on, click View Register, and in the next screen, click Reconcile in the upper right corner. Fill in the ending balance listed on the statement, and the statement date. If you were charged a service fee or earned interest, put in the dollar amount and the date it posted to your account, and QuickBooks will post them for you. Then click Start Reconciling.
The next window will show a list of all the payments, expenses, and deposits that you’ve posted to your bank account that haven’t been marked as cleared on a previous statement. Check off each one that’s cleared on the current statement.
Across the top of the screen, you’ll see details being tracked for the reconciliation. Statement Ending Balance is the amount you put in when you started. Cleared Balance shows a running total of the payments and deposits you’ve checked off as cleared. Your goal is for the Difference to equal zero. When it does, click Finish Now. You’ll have a chance to view a reconciliation report, which shows details about transactions that have cleared the bank, and those that haven’t. You can also find this and previous reconciliation reports by going to the Reconcile screen from the bank register, and clicking History by Account in the upper right corner.
If the Cleared Balance in QuickBooks doesn’t match the ending balance on the bank statement, there are a few possible fixes:
- Double-check that you entered the correct ending balance, and that the starting balance on the statement and in QuickBooks match. If the starting balances are different, see this article about what might have caused it, and this article about how to fix it.
- Check if you transposed digits when you wrote a check or entered a deposit, e.g. you recorded a $32 deposit when you actually deposited $23. If this happened, open the transaction and correct it.
- If the Undeposited Funds account has a balance, you may have used the Receive Payments or Sales Receipt window, but not posted them in a deposit to finish recording the transaction.
- You may have edited or deleted a transaction that was marked as cleared on a previous reconciliation. In this case, re-enter or edit the transaction back to what it formerly was. Once you do, go to the bank register and marked it as reconciled by clicking the column between Deposit and Balance until it says R. (For Credit Cards, this column is between Payments and Balance.)
There are a few additional tricks to make reconciliations easier:
- Work on one section at a time – deposits or payments/withdrawals. Your bank statement probably breaks things into sections, so work through each one rather than bouncing around.
- If you get stuck, you can unmark all the cleared transactions and start over.
- If there are old transactions that haven’t cleared, you may be able to void them. For old checks that didn’t get cashed, follow up with the vendor to confirm if they received it, and reissue if necessary.
- Any transactions that are voided will have a zero balance. You can mark these as cleared so they don’t take up space in future reconciliations.
- If you have online access for your bank or credit card, set up a feed in the Banking menu on the left side of QuickBooks Online. This will download transactions as they post to your account, and anything that you post or match through that screen will automatically be checked off when you start the reconciliation. Because of this, if you clear everything in the bank or credit card feed, the reconciliation should finish almost instantly when you open it.