10. Reconcile

Now that you’ve matched and added transactions through the bank feed, reconciling will be a breeze!

Reconcile Bank Accounts and Credit Cards

Reconciling your bank accounts involves comparing the transactions you entered to QBO to the transactions on the bank statements. This checks that you have captured all the activity that occurred on your bank statement. This isn’t proof that your books are accurate, but it does make sure that no banking activity has been missed and that duplicate entries weren’t created.

Why doesn’t reconciling prove your books are accurate?

The bank reconciliation only looks at transactions that show up on your bank statement. This doesn’t include Bills, Invoices, or uncashed checks since those amounts won’t show up in the bank statement until money has actually moved through the account. Any other transactions that happen outside of a bank statement won’t be reviewed through the reconciliation process either. Reconciling also doesn’t ensure that transactions have been categorized to the correct account or class. So the reconciliation is an important and integral step in the monthly process, but it doesn’t prove accuracy. You will also want to review the reports to check for accuracy, which we’ll go over in the next step.

You should reconcile all bank accounts, savings accounts, and credit card accounts to each statement you receive. Most statements are monthly, but some may be quarterly.

How to reconcile an account

When all transactions are entered for the month and you have your bank statement, you are ready to reconcile!

Navigation: All Apps > Accounting > Reconcile

Enter statement details

• Choose the account to reconcile
• Enter the statement ending balance and end date.
• Click Start Reconciling.

Reconcile an account connected to the bank feed

• If you have matched transactions in the bank feed, then most or all of the transactions on the reconciliation page will already be checked off as matching the bank statement.
  • In this case, if matched transactions are checked off and the difference at the top of the screen is zero, you just need to check a couple things to make sure everything is correct:
    • Make sure that the Payments and Deposits at the top of the screen match the totals shown on the bank statement. If they don’t match, you will need to determine what is missing or added by manually reconciling the account, as described below.
    • Look at anything not checked off. Transactions that don’t have the green check mark were entered to QBO but have not been matched in the bank feed. This could indicate a duplicate entry or just a transaction that hasn’t cleared yet and may be included in the next month’s statement.
      • If it is a duplicate entry, then you can delete or void the duplicate. 
      • If it is a valid transaction but hasn’t cleared yet, leave it as is. Not every transaction that occurs in one month will be processed through the bank and reconciled in the same month. This is especially true for checks because they get entered when they are issued, but may not be cashed by the recipient until much later.
    • When you have confirmed everything matches to the bank statement, any uncleared transactions are valid, and the difference shows as $0.00, click Finish Now.

Reconcile an account without a bank feed connection

• If you have an account that is not connected to the bank feed, you will need to match transactions to the statement manually during reconciliation.
  • Start the reconciliation the same as above. You will need your bank statement open in another window or printed on your desk.
  • Go down the bank statement transactions one by one and check off the matching transaction both in QBO and on the bank statement. If you find any transactions on the statement that are not in QBO, use the +new button to add them. Once they are added to QBO, they will show up on the recon page to check off. You may need to save the reconciliation and refresh the page for them to appear.
  • When everything is entered and matched, check for anything that has not been checked off. This could indicate a duplicate entry or just a transaction that hasn’t cleared yet and may be included in the next month’s statement.
    • If it is a duplicate entry, then you can delete or void the duplicate. 
    • If it is a valid transaction but hasn’t cleared yet, leave it as is. Not every transaction that occurs in one month will be processed through the bank and reconciled in the same month. This is especially true for checks because they get entered when they are issued, but may not be cashed by the recipient until much later.
  • When you have confirmed everything matches to the bank statement, any uncleared transactions are valid, and the difference shows as $0.00, click Finish Now.

Repeat the reconciliation process for each bank and credit card account. If you have a PayPal account, reconcile that as well. You can log in to the PayPal account and pull monthly statements under Reports.

Other accounts to reconcile

This guide focuses only on the bank account reconciliations, because that’s likely to be the only accounts you will need to reconcile when just starting out. Every account on the balance sheet can be reconciled, so as your organization grows you may end up with other accounts to reconcile, such as prepaids, clearing accounts, and more complex investment accounts. These reconciliations may be based on statements or other records that prove the ending balance. For now, you probably only need to do the bank reconciliations, but knowing this process will help prepare you to reconcile other accounts in the future.

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