- September 24, 2024
- Posted by: TheQBC
- Category: QuickBooks Desktop
Bank account reconciliation is no fun, but it keeps your balances accurate. Here’s how QuickBooks can help you get ready.
If you had to make a list of your five least favorite financial chores, bank account reconciliation would undoubtedly be on it. No one likes reconciling. But what good does it do to have QuickBooks tell you your account balances if there’s a chance they’re not accurate?
QuickBooks’ ability to import your bank account transactions makes this process easier than the old checkbook register and calculator method. Because you can see transactions once your bank has cleared them, you can actually do some of your prep work on an almost daily basis, rather than having to do everything at the end of the month.
Why Reconcile?
We strongly advise you to use QuickBooks’ reconciliation tools, for a variety of reasons. Besides knowing that your QuickBooks balance is accurate, there are numerous other benefits. For example, you can:
- Monitor your accounts for unauthorized access,
- Ensure that your bill payments have cleared,
- Match invoices to payments, and,
- Find errors before they can cause significant problems.
But before you begin the actual reconciliation process in QuickBooks, there are steps you should take so your work session goes as smoothly as possible. Here are six tips.
Make sure you have QuickBooks accounts set up for all of your real-life bank accounts.
The Chart of Accounts can be intimidating, and we try not to send you there unless it’s absolutely necessary. If you’re at all nervous about modifying the backbone of your QuickBooks company file, we can walk you through this.
Open the Company menu and select Chart of Accounts. Click the down arrow next to Account in the lower left corner and select New to open a window that looks like this:
You’ll see this window when you add an account to QuickBooks’ Chart of Accounts.
If you’re reconciling your checking account(s), for example, click the button in front of Bank, then click Continue. Complete the fields in the window that opens and save the account.
Warning: It’s very important that you enter the correct Opening Balance, which should be printed on the statement you’re about to reconcile. After you’ve gone through the process once, QuickBooks will automatically enter this number. Please ask us about this if you’re unsure.
Check to see that you’ve entered all cleared transactions in QuickBooks.
If you’ve been importing transactions online, do a final download of cleared transactions from your bank account. You can get a jump on reconciliation by ensuring that you’ve entered everything in QuickBooks that has been imported within the period you’re going to reconcile. Look carefully for deposits and payments, since these tend to be missed more often than other transactions. Enter anything in QuickBooks that’s missing.
If you don’t download transactions, gather all of your financial papers.
It will be more time-consuming to reconcile an account if you’re not importing your account data from your financial institutions. So to save time during the actual process, make sure you have all of the paper that documents your income and expenses, including deposit slips, your checkbook register, pay stubs – anything that is related to money you’ve received or sent. You might set up monthly folders to keep all of these documents together.
Don’t forget about service fees and interest.
QuickBooks’ Begin Reconciliation screen, displaying fields for interest earned and service charges
Yes, these might seem like minuscule amounts, but it only takes a missing penny for a reconciliation to fail. Don’t forget to enter them as you follow QuickBooks’ step-by-step instructions. The window pictured above will open when you eventually open the Banking menu and click Reconcile.
Understand the process.
If you’ve never reconciled a bank account before (even manually), we highly recommend that you schedule a session with us so we can walk you through it. If you’ve gone through it using a checkbook register and bank statement, it shouldn’t take you too long to understand how QuickBooks’ procedure works.
Backup your QuickBooks company file before you start to reconcile.
You should be doing this regularly anyway (at least every third time you open QuickBooks), but definitely do it before you reconcile an account. Open the File menu and click Back Up Company. You’ll choose between Create Local Backup (to a USB drive, for example) and Setup/Activate Online Backup. The latter requires a subscription to Intuit Data Protect, which is included with QuickBooks Desktop Pro Plus and Premier Plus. It costs $9.95 per month or $99.95 per year if you’re not using one of those versions. Intuit Data Protect has a capacity of 100 gigabytes, so you could back up your entire system if you subscribe.
A Monthly Challenge
We wish we could say that bank account reconciliation gets easier the more you do it. While it’s true that the mechanics of the process get clearer with repetition, you can still run into difficulties getting the difference between your QuickBooks account and your bank statement to equal zero. It’s likely that you’ll need our help with this. If you’d like, we can even play a more active role in your accounting chores. Just contact us, and we’ll come up with a plan.