Bank reconciliation in QuickBooks Online step by step
Bank reconciliation in QuickBooks Online is done from the Reconcile screen: open it from the Settings gear, choose the bank account, enter the ending balance and ending date from your statement, then tick each transaction that appears on the statement until the difference shows 0.00. Finish, and QuickBooks saves a reconciliation report.
What QuickBooks reconciliation does and does not do
QuickBooks Online includes a built-in reconcile tool that works from your bank feed and the transactions recorded in your books. It is a solid way to confirm that your QuickBooks bank balance agrees with the bank statement, and for many small businesses it is all they need.
The flow below describes the general, well-known process in QuickBooks Online. Menu labels and screens change from time to time and can differ between editions and regions, so if something looks different on your screen, follow the labels you see and the help built into QuickBooks. The accounting logic does not change.
A quick note on terms. In QuickBooks, a transaction can be matched to a bank feed line and still not be reconciled. Matching links the feed to your books day to day, while reconciling confirms the whole month against the statement and marks the items as reconciled. You need both.
Before you reconcile in QuickBooks
A reconciliation goes much faster when the groundwork is done first.
- Have the bank statement for the month at hand, with its ending balance and ending date.
- Review the bank feed and categorize or match all transactions for the period, so they are recorded in your books.
- Check that the previous month is reconciled. QuickBooks carries the beginning balance from the last reconciliation.
- Record any bank fees, interest and automatic debits you see on the statement that are not in QuickBooks yet.
If the beginning balance on the reconcile screen does not agree with the opening balance on your statement, stop there. A previously reconciled transaction was probably edited or deleted. Fix that first, otherwise this month inherits the problem.
It also helps to reconcile monthly rather than catching up on several months at once. A single month has a manageable number of transactions, and when something does not agree, you only have a few weeks of activity to search instead of a whole quarter.
Steps for bank reconciliation in QuickBooks
In QuickBooks Online, the reconcile flow generally looks like this.
- Select the Settings gear and choose Reconcile, which is listed under tools. You can also reach it from the bank account register or the accounting menu, depending on your version.
- Choose the bank account you want to reconcile.
- Enter the ending balance and ending date exactly as they appear on your bank statement.
- Start reconciling. QuickBooks lists payments and deposits recorded in your books for that account.
- Compare each transaction with the statement and tick the ones that appear on it. Leave the rest unticked.
- Watch the difference figure. When every statement item is ticked, it should show 0.00.
- Finish now. QuickBooks saves the reconciliation and lets you view or print the report.
As an illustration, say your statement ends at $26,480 on the last day of the month. You enter that balance and date, tick the deposits and payments that cleared and leave two checks of $700 and $1,150 unticked because they had not cleared. When the difference reaches 0.00, those two checks remain as uncleared items and should clear next month.
Reconcile credit card accounts the same way, using the card statement instead of the bank statement. The ending balance on a card is what you owe, and the ticked items are the charges and payments that appear on that statement. Many businesses reconcile every bank and card account in QuickBooks at the same time each month, so nothing is skipped.
When the difference will not go to zero
If you have ticked everything you can and the difference is not zero, work through these checks in order.
- Compare the ending balance and date you entered with the statement. A typo here is the most common cause.
- Look for a statement line with no transaction in QuickBooks, such as a fee or interest, and record it.
- Look for a transaction ticked by mistake that did not appear on the statement.
- Check for duplicates, often caused by matching a feed line and also entering the same transaction by hand.
- If the difference is divisible by nine, look for transposed digits.
- Compare the beginning balance with the statement opening balance. If they differ, an earlier reconciled item was changed.
Resist the urge to force the difference to zero with an adjustment unless you understand it and your accountant agrees. A forced adjustment hides the problem and makes next month harder. Our article on reconciliation discrepancies explains how to trace each type of difference.
Reviewing and correcting past reconciliations
After you finish, QuickBooks keeps a history of reconciliations for each account, usually reachable from the reconcile screen through a history or reports link. Open the report for the period you just closed and check the beginning balance, the cleared items, the uncleared items and the ending balance. Save or print it for your close file, because it is the evidence an auditor or accountant will ask for.
Use the uncleared items list as next month's starting checklist. Each check or deposit on it should appear on the next statement. Anything still uncleared after a month or two deserves a question: a check that was never cashed, a deposit that was recorded but never made, or a transaction entered twice.
If you find a mistake in a reconciliation you already finished, avoid editing or deleting reconciled transactions casually, because it changes the beginning balance of every later reconciliation. Depending on your edition and role, QuickBooks lets an accountant user undo a reconciliation. Many teams leave that step to their accountant and record a correcting entry in the current month instead, with a note explaining it.
Where built-in reconciliation gets hard
The built-in tool reconciles one account against one bank feed. That works well until money arrives in batches. A card processor payout is one deposit on the statement, but behind it are many charges, refunds and fees. QuickBooks sees one line, and someone has to rebuild the payout to know whether it is right. The same goes for marketplace settlements, one customer payment covering several invoices and accounts in several currencies.
Accounting firms feel this across many clients, and growing ecommerce businesses feel it with several processors. Owners who hit this wall can look at reconciliation software for small business, which handles the batched deposits QuickBooks leaves for you. That is when teams look for bank reconciliation software that sits alongside QuickBooks rather than replacing it. Our best bank reconciliation software guide lists the criteria to compare.
Using Reconciles alongside QuickBooks Online
Reconciles reads your QuickBooks Online ledger export and your bank statement, together with payout reports from processors such as Stripe, PayPal and Shopify. It splits each payout into charges, refunds and fees, matches everything to the ledger and the bank, and sends whatever does not match to an exceptions queue with a reason for each item.
Every match has a reason and a confidence score, and nothing posts to your ledger without review. Fees, refunds and corrections go back to QuickBooks as journal entries in a CSV file, so your books stay in QuickBooks and the reconcile screen becomes a quick final check. The QuickBooks reconciliation page covers the export and import steps, and reconciliation software for accounting firms covers working across many client files.
