How to reconcile in Quickbooks Online and Desktop

Whether you’re a small business owner or accountant, knowing how to reconcile in QuickBooks to match your transactions to your bank statements is essential. 

In this post, you’ll learn when and why you should reconcile in QuickBooks. You’ll also find out some of the best practices for doing so, as well as when you might need to undo reconciliation. 

Additionally, by accessing the video below, you’ll learn:

  • How to reconcile in QuickBooks Desktop.
  • How to reconcile in QuickBooks Online. 
  • How to undo reconciliation in QuickBooks Online. 
  • The best way to minimize reconciliation discrepancies.

What is bank reconciliation in QuickBooks?

Learning how to reconcile in QuickBooks is crucial for keeping your accounts accurate. But what exactly does it entail? 

Bank reconciliation involves comparing your QuickBooks records to your bank statement. This process helps identify differences between the two so you can adjust and match them perfectly. 

Think of it as making sure that your checkbook balance matches what the bank says you have.

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When should you reconcile your bank account in QuickBooks

You should reconcile your bank accounts in QuickBooks every month to check for inaccuracies that will harm your business. 

Ideally, you should reconcile in QuickBooks whenever you receive an alert from your bank or credit card provider that your statement is ready to view. This way, you can rest assured that your QuickBooks Online register balance at the end of the month matches your bank statement.

Why is bank reconciliation important?

Reconciling ensures that your finances are accurate and up to date. Conducting a bank reconciliation on a regular basis  guarantees that you accurately account for the money you spend or receive. It also helps you avoid issues around missed or duplicate entries.

Most importantly, reconciling accounts lets you keep track of your cash flow, giving you insight into how you’re managing your money 

Without reconciliation, you risk having an incorrect view of your finances, which can lead to big losses and legal trouble.

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How to reconcile in QuickBooks: Step-by-step video tutorial

Knowing how to reconcile in QuickBooks is an essential skill that you should do regularly to keep track of your business transactions.

Whether you want to know how to reconcile in QuickBooks Online or QuickBooks Desktop, you’ve come to the right place. Watch the video tutorial to learn how to reconcile in QuickBooks

Better yet, with software like Method, you reduce your manual work on correcting discrepancies between your transactions and bank statements.

This will save you time and give you tools for effective financial management, so you can grow your business and not your stress.

Best practices for bank reconciliation in QuickBooks

Review the bank statement information in QuickBooks

First, ensure your QuickBooks Online database has the most recent bank statement information. 

You can do this by connecting your bank account for automatic updates or by manually importing your latest bank statement.

Compare the beginning and ending balances and dates to make sure they align. 

Look for the exact difference

Note any difference between your bank statement ending balance and your QuickBooks balance.

Also, look out for transactions in QuickBooks that are exactly equal to the discrepancy you found. It’s common for a difference to be caused by an overlooked transaction or a duplicate entry.

Balance one transaction type at a time

Reconciling all transactions at once can be overwhelming. Tackle one type at a time to stay organized and in control.

In QuickBooks, sort transactions by type (e.g., expenses, deposits, withdrawals).

Then, focus on one transaction type, matching them one by one to your bank statement. Once you’re done, move on to the next type.

Investigate unmarked transactions

Unmarked transactions are ones that aren’t found within your bank statement. These can cause discrepancies between your financial records.

Some unmarked transactions are due to timing differences, like checks that haven’t cleared yet. Make a note of these for your next reconciliation.

If an unmarked transaction is a mistake, correct it to keep your records accurate.

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Reasons to undo reconciliation in QuickBooks

Now you know how to reconcile in QuickBooks and the best ways to do it. But sometimes, it’s necessary to undo a reconciliation to fix inaccuracies. Here are some reasons why. 

Uncleared transactions

One of the main reasons to undo reconciliation is to deal with uncleared transactions that are accidentally marked as cleared.

These are transactions that were recorded in QuickBooks but haven’t actually cleared the bank, such as checks that haven’t been cashed. Reversing reconciliation here keeps your records accurate, especially if the uncleared transaction never ends up coming through.

Data entry errors

Errors in data entry are another reason to reverse reconciliation. Common errors include:

  • Transaction amounts in QuickBooks that don’t match your bank statement.
  • Missing entries that are present on your statement but missing in QuickBooks.
  • Transactions that were accidentally entered more than once. 

Categorization errors

Categorization errors happen when transactions are in the wrong category in QuickBooks. For example, someone on your team might mistakenly categorize an expense as income.

Left unchecked, these errors will affect your financial reports. So, you need to undo the reconciliation in order to re-categorize the transaction. 

QuickBooks bank reconciliation FAQs

Can you undo a bank reconciliation in QuickBooks?

You can undo a bank reconciliation in both versions of QuickBooks. Here’s how to undo reconciliation in QuickBooks Online:

  1. Go to the “Accounting” tab and select “Chart of Accounts.”
  2. Choose the account you want to undo reconciliation for and click “View register.”
  3. Select the transaction you want to unreconcile.
  4. If the transaction is reconciled, you’ll see an “R.” Click the checkmark to make it blank. This removes the transaction from the reconciliation. 
  5. Save the transaction. Now that your books are balanced, you should see a difference of zero. 
  6. Select “Finish now” to complete the process.

To do the same in QuickBooks Desktop:

  1. Open QuickBooks Desktop and go to the ‘Banking’ menu.
  2. Select “Reconcile.” 
  3. Choose the account you want to undo reconciliation for, and click “Undo Last Reconciliation.”

Note: In some versions of QuickBooks Desktop, you may have to undo each reconciliation manually. To do this, go to “Register” and select the transaction. Then, click on the “R” at the top of the transaction to change its status.

How can I unreconcile an entire month in QuickBooks?

To unreconcile an entire month in QuickBooks, follow these steps:

  1. Go to the “Reconcile” menu under “Accounting.” 
  2. Select “History by account.”
  3. Choose the account and the month you want to unreconcile and click the “Undo” button.

Can the primary admin undo reconciliations in QuickBooks?

Yes, the primary admin in QuickBooks Online has permission to undo reconciliations.
Also, users with appropriate access rights, such as accountants, can undo them.

Reduce your reconciliation discrepancies with your free trial of Method.

Image credit: Daenin via Adobe Stock 

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