welcome to the fifth small business
QuickBooks Online training course in
this lesson we're going to cover how to
reconcile bank accounts and QuickBooks
Online to follow along with me log into
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similar to your personal bank accounts
it is important that you reconcile your
business bank accounts on a monthly
basis reconciling is the process of
matching the transactions on your bank
statement to what you've recorded in
QuickBooks reconciling your bank
accounts regularly will help to ensure
any discrepancies between your records
and the banks are resolved in a timely
manner entirely notification of any
fraudulent transactions for example if
you notice transactions listed on your
bank statement that you did not
authorize you could notify the bank as
soon as possible so that they can
investigate some of the benefits of
reconciling your bank accounting
QuickBooks are all transactions on the
bank statement get recorded in
QuickBooks your financial statements
such as the profit and loss statement
and the balance sheet are up to date
click the links below to learn more
about the profit and loss and balance
sheet reports all of the reconcile
transactions are marked in QuickBooks as
cleared and finally you are able to run
bank reconciliation reports that will
provide the details of the items that
have cleared the bank and those that
remain outstanding before we walk
through the steps of how to reconcile be
sure that you have your bank statement
handy for the account that you want to
reconcile we will refer to the bank
statement often during this process from
the homepage of your quickbooks online
account you want to go ahead and click
on the gear icon located here in the
upper right hand corner and right below
tools the third option is reconcile the
first thing that you want to do is go
ahead and select the bank account that
would like to reconcile from the
drop-down after selecting your account
you might see a notification similar to
this one here so if your beginning
balance does not match you will see this
notification which lets you know that
you need to go ahead and fix that before
you proceed with the current
reconciliation so at some point someone
accidentally probably made a change to a
transaction that was reconciled last
month and so now in this example we've
got a difference of a hundred and five
dollars now the nice thing about the
reconciliation process is you can simply
click this link that says we can help
you fix it and walk through the steps to
go ahead and fix that out of balance you
don't want to proceed with the
reconciliation until this has been fixed
otherwise you won't be able to balance
at the end the next step you want to do
is go ahead and enter the ending balance
that's on your current bank statement
that you want to reconcile to and also
enter the corresponding ending statement
date in this field here if you have
finance charges or any kind of interest
charges on your bank statement go ahead
and indicate the date here and the
finance charge amount in this field as
well and once you've completed all of
these fields you can click the start
reconciling button here at the bottom
here is the new and improved
reconciliation layout so let's talk
about what's here statement ending
balance this is the amount that we just
entered in the previous screen from the
actual bank statement the beginning
balance is the amount of the ending
balance from last month's statement
QuickBooks will automatically populate
this field for you the cleared balance
is going to accumulate as you begin to
reconcile each item in this screen this
amount will change depending on whether
you have selected a payment or a deposit
transaction
the payment amount will increase as you
select payments to reconcile from the
detailed transaction section below and
the deposit amount will increase as you
select deposits to reconcile from the
detail transactions below the difference
here is calculated by QuickBooks it's
the difference between your statement
balance and the cleared balance our goal
is to get to a difference of zero in the
transaction section below you will see
all of the payments and deposits that
have been recorded in QuickBooks as of
your statement ending date you can
filter this section simply by clicking
on the tab so we can click on payments
to see just payments only we can click
on the deposits tab to see just deposits
only or we can go back to the default
which shows all payments and deposits
there is no right or wrong way to
reconcile however I suggest that you
reconcile the area with the least number
of transactions first remember that our
goal is to make sure that every deposit
and withdrawal listed on the bank
statement has been marked cleared in
this reconciliation window to mark an
item as cleared you simply want to click
the radio button here in the far right
column to select that and that item will
be marked as cleared so let's say that
we want to go ahead and start with our
deposits as we know that has the least
amount of transactions and so with the
deposit you could actually look at your
bank statement and mark each deposit
individually or if you see all of these
listed here then you can go ahead and
click the top radio button which will
select all and this is just confirming
that we want to select all of the
transactions listed here so we'll say
yes select all here so once you've
marked all the deposits in this window
that appear on your bank statement you
want to verify that the total deposit
amount cleared matches the total
amount on your bank statement so in this
example here are total deposits that
we've marked as cleared equal two
thousand three sixty nine fifteen and if
that matches what's on your bank
statement then you are ready to move on
to payments if it does not match then we
are going to cover tips on how to
troubleshoot out of balances in just a
few minutes so we'll go ahead and go to
the payments tab and we will repeat the
same process of marking all of our items
as cleared or as I mentioned you may
want to do one by one since they're
going to be several transactions here so
you don't want to assume that
everything's listed is on your bank
statement so again we want to verify
that the total payments amount here that
we've cleared matches our bank statement
so in this example the total payments
equals one thousand eight sixty nine
fifteen you want to double check and
make sure that that also matches what's
on your bank statement again if your
withdrawals or payments amount is out of
balance we're going to discuss ways that
you can troubleshoot this issue in just
a few minutes once all of your deposits
and withdrawals have matched the bank
statement you should have a difference
of zero which is our goal so now that we
have our difference of zero we can go
ahead and click the finish Now button to
generate our bank reconciliation reports
so when we click this button behind the
scenes QuickBooks will mark all of the
deposits and credits and payments that
we've reconciled as cleared so let's go
ahead and run our report and so you've
got the option to just click done and
not view the report or go ahead and view
the report which is what we want to do
and so here is our reconciliation report
and so at the top here is a summary just
a summarized view of the checks and
payments that cleared and then down
below you'll see each individual item
for the withdrawals and the deposits
that actually cleared so I want to share
a couple tips with you here the first
one is it's important that you save all
bank reconciliation reports for every
bank account the easiest way to do this
is go ahead and create a folder I would
suggest one folder for each bank account
and save each report so you should have
at least one reconciliation report for
each month for each account and to those
folders to learn more about organizing
key reports and documents such as this
check out our small business bookkeeping
guide click the link below to access
this guide my second tip I want to share
with you is bank reconciliation reports
are one of the top five reports that
auditors will request in my experience
as an auditor if you are not able to
produce these reports I can promise you
that the audit will not go well alright
so now let's talk about some
troubleshooting tips for reconciling
your banking credit card accounts in
QuickBooks Online try some of these tips
if you're having trouble getting to a
zero difference between what's in
QuickBooks and what's on your bank
statement tip number one if possible
narrow the search down to the
transaction type figure out if you are
out of balance with the withdrawals and
payments or deposits and credits tip
number two if you are out of balance for
deposits and withdrawals then tackle
them separately in other words balance
withdrawals first and then move on to
deposits and credits or vice versa tip
number three look for the exact dollar
amount that you are off for example if
your difference is twenty one dollars
and fifty cents
then look for a transaction for this
amount on your bank statement and then
on both the withdrawals and the payments
section and the deposits and credit
section of the reconcile window
number four triple check the information
that you entered from the bank statement
such as the nd balance and your
statement ending date if either of these
are incorrect that could cause the other
balance as well tip number five check to
see if there are any transactions in the
reconcile window that you did not select
remember if the transaction is on your
bank statement then the radio button in
QuickBooks should be marked in the
reconcile window tip number six if you
do have a transaction on the bank
statement that is not in QuickBooks then
you will need to add it to QuickBooks to
do so just select the finish later
button from the drop down to save your
work if the missing transaction is a
withdrawal or payment then you would
enter it as you normally would we
explain this more in our lesson on how
to create a check in QuickBooks which is
linked below if the missing transaction
is a deposit then enter it as you
normally would we explain how to record
deposits in QuickBooks and another
lesson linked below tip number seven
take a break if you've been at it for a
while and you need a break select the
finish later option to save the work
that you have done so that you can
easily pick up where you left off
sometimes taking a breather and coming
back can help you spot what's causing
the difference quickly and finally tip
number eight while it might be tempting
I recommend that you don't click that
reconcile button until you have a
difference of zero the problem will not
go away the difference will just carry
over to the next month until you figure
it out if you do hit the reconcile
button and you've not figured out the
difference QuickBooks will record the
auto balance and a miscellaneous expense
account called unreconciled
discrepancies of course if we're talking
about a small amount five dollars or
less then it might be worth your while
to move on at the end of the day you get
to determine what amount you were
comfortable with reconciling your bank
accounts do not change your financial
statements however behind the scenes in
QuickBooks the items that have been
reconciled or fled
are in the check register with the
letter R so let's head over to the check
register so we can see that so we are in
our check register and if you notice in
this column several transactions have
the letter R and that simply means that
you have matched these up with your bank
statement and these have been reconciled
so one of the things you want to make
sure is that you don't want to make any
changes to a reconciled item this is
primarily due to the fact that you've
balanced it with your bank statement you
can edit the account information if you
need to so for example if you've
categorized something as meals and
entertainment like this item here and it
should have been office supplies then
you can go ahead and definitely make
that change because it will not change
the actual amount but you want to make
sure that you don't make changes to the
date or the amount if you do it can
cause your financial statements to be
inaccurate and you will no longer be in
balance with your bank that wraps up the
lesson on how to reconcile bank accounts
and quickbooks online to access our full
quickbooks online course or any of the
other lessons in this series click this
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