Cleanup

Bank Reconciliation: A Small Business Guide

Bank reconciliation means comparing your books to the actual bank and credit card statements, line by line, until the two agree. It’s the most useful habit in small business bookkeeping. It’s also the first thing I check when a new QuickBooks file lands on my desk.

Why reconciliations matter

Skip them and duplicate transactions, missing deposits, uncleared transfers, old checks, and bank feed mistakes all sit there unnoticed. Your reports can look current and still be wrong underneath. That’s worse than knowing you’re behind.

What a reconciliation usually catches

• Duplicate entries, often from a bank feed match that went sideways
• Transactions that never made it into the books
• Items posted to the wrong account
• Checks and payments that never cleared
• Transfers recorded on only one side

It also gives you one point every month where a strange balance gets questioned before it turns into an expensive problem.

A simple reconciliation workflow

1. Start with the ending balance on the statement.
2. Match cleared activity one line at a time.
3. Investigate anything missing, duplicated, or unmatched.
4. Confirm the difference is zero before you finish.

Take the time it takes. A reconciliation that’s off by a little is still off.

Mistakes I see most often

The biggest one is forcing a reconciliation to balance with an adjusting entry before you know where the difference came from. That buries the problem instead of fixing it. Skipping several months and hoping the gap stays small is a close second. It never stays small.

Owners also treat the bank feed like it’s a review. It isn’t. The feed saves real time, and somebody still has to look at every match.

What clean reconciliations buy you

Once the accounts reconcile every month, your Profit and Loss and Balance Sheet turn into reports you can act on. The cash balance matches the bank. You can answer a question in ten minutes instead of an afternoon. At year-end your CPA gets a file to work from.

Reconciling every account, every month, is a core part of my monthly bookkeeping service. That’s why the reports I send by mid-month tie to the statements.

I’m a bookkeeper, not a tax preparer or attorney. For tax and legal questions, confirm the details with your CPA. I keep the books that make their job easier.