How to Reconcile in QuickBooks Online
Learning how to reconcile in QuickBooks Online is essential when you start to use QuickBooks for your small business bookkeeping. Through the process of bank reconciliation, you will match all of the cash flow on your bank statement with your entries in QuickBooks Online.
The steps for reconciliation in QuickBooks Online are:
Click on the Gear icon, then under Tools, click on Reconcile.
Click on the Accounts drop-down menu and select the bank account you want to reconcile.
Enter the Ending balance and Ending date as they appear on your bank statement.
Match the transactions on your bank statement to the transactions you have recorded in QuickBooks and check off each transaction as "cleared,” applying filters to find transactions more easily if needed.
Continue to match and check off one transaction at a time until the Difference field shows a value of zero and you see a "Success" notification.
Print the reconciliation report, if desired.
Repeat the reconciliation process for your checking account, savings account, and credit card accounts, as relevant.
At the end of the process, the difference between your bank statement ending balance and cleared balance should be zero.
Reconciling in QuickBooks Online
If you are doing your own bookkeeping, understanding the steps for reconciliation using QuickBooks Online accounting software will make the process quick and easy. If you decide to hire a QuickBooks accountant, this professional will most likely complete bank reconciliations for you as part of their small business bookkeeping services.
Step 1: Find the Reconcile Page
The Reconcile page can be accessed in two ways on QuickBooks Online:
Click on Accounting in the panel on the left side of the screen and select Reconcile.
Click on the Gear icon, then under Tools, click on Reconcile.
In the upper right corner of the reconciliation window, you will see two blue links:
Summary
History by Account
If you click on Summary, you will be able to view a list of past reconciliations and the dates they were completed.
If you click on History by Account, you will see the same list along with any changes or auto-adjustments made by QuickBooks. You can also print out a reconciliation report for any previous reconciliations on this page.
Step 2: Select an Account
On the Reconcile page, you will see the question "Which account do you want to reconcile?" with a drop-down menu that lists all of your added accounts. Select an account from the drop-down menu and click Reconcile. Please note that you can save your progress when reconciling and return to continue with the process later. In that case, you would click Resume reconciling.
Step 3: Enter Your Bank Statement Information
In the Reconcile window, you will see three fields:
Beginning balance
Ending balance
Ending date
Find the ending balance and statement ending date on your bank-provided statement and enter them into the fields. If you've chosen to go paperless, you should be able to open the bank statement from your online banking account.
The beginning balance should be identical to the ending balance from the prior month and will be auto-populated by QuickBooks Online—so it's important to make sure the previous month has been reconciled correctly before you start reconciling your most recent bank statements. After you’ve entered your statement information, click on Start reconciling.
Step 4: Match and Clear Transactions
Now the real fun begins. One by one, go through the list of transactions on your bank statement as they appear on your screen. If the details match, check the circle at the end of the line. That transaction will be marked as "Cleared," and the cleared amount will be subtracted from the difference displayed at the top of the screen.
Tip: Apply Filters So Transactions Are Easier to Find
To locate transactions more efficiently, you can filter the list of transactions by:
Payments
Deposits
Cleared status ("C")
Transaction type
Payee
Date
In the Find field, you can enter a reference number, amount, greater than, less than, or memo to further refine your search.
Step 5: Continue Clearing Transactions Until the “Difference” Field Is Zero
Continue through the list of transactions until every transaction is checked off. At this point, the difference displayed should be zero. If the difference isn't zero, you'll need to work out why. In some cases, it could be that there are transactions on your statement that weren't entered into QuickBooks Online.
If there is something awry, you'll need to save your work and add the missing transactions before continuing with the process of reconciliation. In other cases, you may have accidentally unchecked a previously reconciled transaction. If the bank statement information was entered incorrectly, you can click on the Edit Info tab and correct the problematic dates and/or amounts.
Save/Finish
Ideally, all of your entries will be in order and you will see the "Success!" message. Now you can click Finish. If the difference isn't zero or you don't have time to clear all of the listed transactions at once, you can save your work and come back to it later. To save, click Save for later and select "Save for later" from the drop-down menu.
Step 6: Print
Once all of the transactions are cleared, the difference is zero, and you see the “Success!” message, you can click on View report to view and print the reconciliation report or click Done if you plan to run the report later. Remember that you can view and print reconciliation reports from previous months by clicking on History by Account.
Step 7: Repeat
After you've finished the bank reconciliation for one account, remember that you still need to repeat the process for all of your business accounts, including your expense account, checking account, and any other accounts that are linked to your QuickBooks account.
Some businesses may also have interest income and other types of income that they need to reconcile. Consider choosing a tax professional who can advise you on all of the types of income and expenditure that you need to reconcile.
When You Should Reconcile Your Bank Accounts in QuickBooks
Reconciliation in QuickBooks Online should be done on a monthly basis—as soon as your bank statement becomes available—to ensure that your QuickBooks transaction record matches your bank statement information and that no transactions are missing. It's much easier to follow up on a missing invoice or sales receipt from the last 30-31 days than it is to follow up on a receipt for a transaction that occurred several months ago.
Why You Should Reconcile Your Bank Accounts in QuickBooks
Reconciling your bank account in QuickBooks is important because it's the only way to make sure you've accounted for everything you've spent and earned in the prior month and haven't missed anything. During the reconciliation process, you may discover:
There is less money in your account than you thought (knowing this will help you to prevent bounced checks and overdraft fees).
Your business has been a victim of fraudulent transactions (this will prompt your business to tighten up transaction security).
If you reconcile your accounts monthly and all of the balances correspond, the QuickBooks cleanup process will be quick and straightforward. If not, it's important to call in an accountant to help you fix up any issues before they get worse.
Ready, Set, Reconcile!
Now that you know how to reconcile in QuickBooks Online, you can reconcile your accounts. If you have been diligent in recording transactions, reconciling your bank statements in QuickBooks Online should be quick and seamless and everything will check out.
If you need additional assistance with QuickBooks, consulting with a certified QuickBooks ProAdvisor and booking QuickBooks training in Jacksonville, Florida, or your nearest city can help to get you back on track. Got those bank statements in hand? Time to reconcile!
