When you reconcile an account, you compare the beginning balance and transactions listed in your QuickBooks Online company file with the monthly statements generated by your bank or credit card company to make sure they match.
When you're finished, your books and bank agree with each other. Accountants call this reconciling, or balancing, your books.
It's similar to the idea of balancing a checkbook/chequebook, when you review your bank statement to make sure it matches the numbers recorded in your checkbook/chequebook. At the end, you know your available balance for that period and you also identify any discrepancies (like unrecognized charges).
Why reconcile?When you reconcile your accounts monthly, you:
- know your books are correct
- make tax time much easier for yourself
- know if your customers are paying you, and also pay your own bills on time to avoid late fees and unhappy vendors/suppliers
- can quickly spot income fluctuations and respond accordingly
- can take quick, informed, and decisive action when you see financial opportunities or possible danger signs
- can catch bank errors that cost you money, like a wrong total for a deposit with multiple checks/cheques
- enable your accountant to give you better advice
- can help prevent possible fraud by employees, accounting professionals, or vendors
Learn how to reconcile
Ready to get started? See Reconcile an account.