How to Reconcile Transactions in QuickBooks

7 March, 2023
Wayne Richard

Wayne Richard

4 minutes
Using Quickbooks for your ecommerce business

One of the most common mistakes small eCommerce business owners make is assuming that a QuickBooks subscription and updating your books a couple of times a year equals good financial management system. 

In reality, good Quickbooks accounting means you (or your bookkeeper) is in there monthly—ideally weekly. And when it comes to accuracy, monthly bank reconciliation is a must. 

Here’s a quick guide to manually reconcile and troubleshoot your accounts in QuickBooks.  

Why reconciling your bank and credit card statements is important?

Reconciliation refers to the process of comparing the recorded balance of a business as listed in Quickbooks to the recorded balance of the business’s bank accounts as listed on your monthly statements to ensure the money spent or earned matches the actual funds leaving or entering the accounts at the end of a fiscal period. 

Reconciling your account is particularly important for a number of reasons, including: 

  • Checking for human errors. Whether it is duplicate entries or an “extra” zero on a transaction, this can really throw up your financial reports.
  • Monitor and manage cash flow. You need to understand how much and where money is moving in and out of your business.
  • Generate accurate tax returns. This can help ensure you aren’t overpaying or underpaying on your taxes.
  • Prevent employee theft and fraud. Scheduled reconciliation processes can uncover and deter employee theft, like unauthorized bank transfers. 

What you need to reconcile your accounts in QuickBooks

Reconciling your account involves individually verifying your business transactions to confirm each amount is accurate and, if not, making note of any discrepancies that need further troubleshooting. 

First, verify all bank, sales, and credit card transactions are imported into QuickBooks and displayed in your bank feeds. 

Pro Tip: Be sure to confirm the opening balance on each account prior to reconciling!

8 most common reconciliation issues to watch for

If you’re left with any issues after reconciling your accounts, one of these eight common reconciliation issues may be to blame.

1. Unreconciled transactions

Unreconciled transactions are often the byproduct of an unconnected sales channel or a broken bank feed within business bank or credit account. In these instances, your account statement may be different from the amount in your QuickBooks transactions list. 

2. Incorrectly matched transactions

Incorrectly matched transactions occur when you or an accounting team member sync separate transactions with different dates or amounts. It’s imperative to pay close attention when comparing internal QuickBooks data with statements provided by your financial institutions, particularly amounts and dates near the beginning and/or end of month. 

3. Unaccounted for bank fees or charges 

Like unreconciled transactions, bank fees or charges that are unaccounted for can be the result of an unconnected business bank or credit account or erroneous entry within your Quickbooks file. However, they can also be a sign of fraud or employee theft. Take note of any miscellaneous charges and follow up with the associated financial institution as soon as possible if you believe fraud, theft, or related crime may have occurred.

4. Late or missing bank statements

Without a statement to compare internal QuickBooks financial data to, it’s impossible to know if your recorded business information is accurate. Schedule monthly reconciliation efforts to coordinate with the receipt of bank statements, and contact the provider if statements are late. 

5. Incorrect starting or ending balance

An incorrect starting or ending balance will significantly skew the accuracy of your reconciliation efforts. Before beginning to reconcile your account, confirm both the starting and ending balance on your QuickBooks account with the starting and ending balance listed on your account statement. 

6. Duplicate transactions

Duplicate transactions are common among debit and credit purchases, but they can accidentally skyrocket your reported expenses for the month. If the date and amount of a transaction are the exact same, it’s likely a duplicate charge.

7. Incorrectly entered dates or amounts

QuickBooks automatically inputs, reconciles, and places a checkmark next to transactions for connected accounts, which limits the risk of user error. However, anytime you or a team member choose to manually input dates or amounts, either detail could create a major reconciliation issue. 

8. Bank errors or discrepancies

Though it’s rare, financial institutions like banks and credit unions can make mistakes, too. By reconciling your accounts periodically, you can confirm the financial statements in your business’s QuickBooks Online accounts match up with the financial statements from your bank or credit union.

How to approach troubleshooting an issue in QuickBooks

Here are some steps you can take to troubleshoot an issue in QuickBooks.

  1. Identify the issue. First, assess your QuickBooks ledgers and account statements to clearly define the problem, and note the exact amount remaining after reconciling.
  2. Gather relevant details. Once you’ve identified the exact difference between your detailed general ledger and account statements, collect any relevant data like individual transactions, physical receipts, bank statements, and error messages.
  3. Research possible solutions. Next, head to the QuickBooks resource library to find video tutorials, visit a related forum, etc.
  4. Work with an eCommerce accounting expert. An eCommerce accounting firm, like Bean Ninjas, works in Quickbooks day in and day out. An accounting firm has likely encountered and knows how to fix almost any issue you bring them. Not to mention, the added benefits that come from having an expert take over your monthly bookkeeping.

    If you are ready to hire an eCommerce accounting firm? Schedule a free call with a member of the Bean Ninjas team here. 

Posted By

Wayne Richard

Wayne Richard

Wayne is a management accountant who forged a 15-year career with tech heavyweight Hewlett Packard before starting his own cloud accounting firm in Tucson, Arizona. Fate (and the Internet) brought him to discover Bean Ninjas via a blog post. Two years later and Wayne’s involvement with Bean Ninjas had grown from a blog comment to contractor to equity partner. When Wayne isn’t managing a global team and equipping entrepreneurs with the financial tools they need to enjoy business success and lifestyle freedom, he’s being an everyday superhero to his wife and five children. Wayne is Bean Ninjas resident e-commerce expert.

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