What bank reconciliation means and why you do it
Bank reconciliation is the process of comparing what QuickBooks Online says you have in your bank account against what your actual bank statement says. Most of the time these numbers match. When they don't, reconciliation helps you find out why — usually a check that hasn't cleared yet, a deposit the bank recorded on a different day than you did, or a fee you forgot to enter.
You reconcile because your bank and your records will drift apart naturally. A check you wrote on Monday might not clear until Thursday. A deposit you made Friday evening might not show up until Monday. Your bank charges fees you might not have recorded yet. Reconciliation catches these timing differences and makes sure both sides agree before you rely on your account balance to make spending decisions.
QuickBooks Online has a built-in reconciliation tool that walks you through this process step by step. It compares your bank's records to what you've entered in QuickBooks and helps you mark off transactions that match on both sides.
Key Takeaways
- Start reconciliation by gathering your bank statement and opening the Reconcile tool in QuickBooks Online under the Banking menu.
- Enter your bank statement's ending balance and date, then mark off each transaction in QuickBooks that appears on your bank statement.
- When your QuickBooks balance matches your bank statement balance, the reconciliation is complete and you can save it.
- If the balances don't match, QuickBooks shows you the difference amount, which helps you track down missing or incorrectly entered transactions.
- You should reconcile your account monthly, ideally within a few days of receiving your bank statement.
Getting to the reconciliation tool in QuickBooks Online
Open QuickBooks Online and look for the Banking menu on the left side of your screen. Click it, then select Reconcile from the dropdown options. QuickBooks will ask you which account you want to reconcile — choose the bank account that matches your bank statement.
If you have multiple bank accounts, make sure you're reconciling the right one. The account name in QuickBooks should match the account name on your bank statement (for example, "Checking Account" or "Business Savings").
Entering your bank statement information
QuickBooks will show you a box asking for information from your bank statement. You need two pieces of information: the ending balance (the total amount in the account according to your bank statement) and the ending date (the last day covered by the statement).
Find these numbers on your bank statement — they're usually at the top or bottom of the first page. Type the ending balance into QuickBooks exactly as it appears on the statement, including cents. Enter the date as it appears on the statement. Do not include any deposits or checks that arrived after the statement date.
QuickBooks will also show you the beginning balance — this should match the ending balance from your last reconciliation. If it doesn't, you may have missed reconciling a previous period.
Matching transactions between QuickBooks and your bank statement
Once you've entered your statement information, QuickBooks shows you two lists side by side: transactions in QuickBooks and transactions on your bank statement. Your job is to mark off each transaction that appears on both lists.
Start with your bank statement. Go through each check, deposit, and fee listed. Find that same transaction in the QuickBooks list and click the checkbox next to it. QuickBooks will mark it as matched. Work through the entire statement this way — checks, deposits, transfers, and fees.
Some transactions may appear in QuickBooks but not on the bank statement yet. This is normal — a check you wrote last week might not have cleared. Leave these unchecked. Some transactions may appear on the bank statement but not in QuickBooks — these are usually bank fees or automatic transfers you forgot to record. You'll need to add these to QuickBooks before you can finish reconciliation.
What to do when the balances don't match
After you've marked off all the transactions that match, QuickBooks calculates the difference between your bank statement balance and your QuickBooks balance. If they match exactly, you're done — click Finish Now and your reconciliation is complete.
If they don't match, QuickBooks shows you the difference amount at the bottom of the screen. This number is your clue. Common reasons for differences include: a check you recorded in QuickBooks but that hasn't cleared the bank yet (this is fine — leave it unchecked), a deposit you recorded but the bank hasn't processed yet (also fine), a bank fee you didn't record in QuickBooks, or a transaction amount you entered incorrectly.
Go back through your bank statement and QuickBooks line by line. Look for transactions with different amounts, transactions in one place but not the other, or transactions dated differently. When you find the problem, either add the missing transaction to QuickBooks or correct the amount. Then start the reconciliation over.
Recording bank fees and other bank-initiated transactions
Your bank statement may show charges or fees that you haven't recorded in QuickBooks yet. Common examples are monthly maintenance fees, overdraft fees, or interest earned. You need to add these to QuickBooks before reconciliation can be complete.
While you're in the reconciliation tool, QuickBooks lets you add transactions directly. Click the Add button (or the plus sign) and enter the transaction details: the date it appeared on your statement, the amount, and what it was for. Choose the right account category — bank fees usually go to an expense account called "Bank Charges" or "Fees".
Once you've added the transaction, it will appear in your QuickBooks list and you can mark it as matched to the bank statement. This brings your QuickBooks balance in line with your bank statement.
Finishing and saving your reconciliation
When every transaction on your bank statement has been marked off in QuickBooks, and your QuickBooks balance matches your bank statement balance exactly, you're ready to finish. Click the Finish Now button.
QuickBooks will save your reconciliation and show you a summary. Keep this summary for your records — it documents that you've verified your account balance as of a specific date. You can print it or save it as a PDF.
Once you finish a reconciliation, QuickBooks locks those transactions so you can't accidentally change them. If you need to edit a reconciled transaction later, you'll have to undo the reconciliation first, make the change, and then reconcile again.
Frequently Asked Questions
How often should I reconcile my bank account?
Most people reconcile monthly, within a few days of receiving their bank statement. Monthly reconciliation catches errors quickly and keeps your records accurate. If you use QuickBooks Online frequently and record transactions as they happen, monthly reconciliation is usually enough.
What if I can't find a transaction that's on my bank statement?
Check the date — you may have recorded it in QuickBooks on a different day than the bank did. Look for the same amount in nearby dates. If you truly can't find it, add it to QuickBooks using the Add button in the reconciliation tool, then mark it as matched.
Can I reconcile a previous month if I skipped it?
Yes. Go back to the month you missed, gather that month's bank statement, and reconcile it. QuickBooks will use the ending balance from that month as the starting point for the next month's reconciliation. It's better to catch up on old months than to skip them, because errors compound.
What does it mean if the difference is a small amount like $0.01?
A tiny difference usually means a rounding error or a transaction amount you entered slightly wrong. Look for transactions with cents — a deposit of $100.50 recorded as $100.49, for example. These small errors are straightforward to miss but they prevent reconciliation from finishing.
Do I need to reconcile if I use bank feeds in QuickBooks?
Yes. Bank feeds automatically read your transactions, which saves you typing time, but they don't replace reconciliation. You still need to reconcile to make sure QuickBooks has recorded everything correctly and to catch any transactions the bank feed missed.