How to Get Your QuickBooks Balances Right Every Time

Reconciling is the process of matching your transactions in QuickBooks with a source document- usually a bank or credit card statement.

This simple function is the way you make sure the balances you are seeing in your books actually match with reality. The longer you go without reconciling the more likely it is the books are off- maybe way off, depending on how you do things.

If the beginning balance is correct and you have checked all the transactions for the period are correct then your ending balance is correct and all is well. Some people don’t bother do this step because they assume that the downloads are already taking care of that but that is definitely not the case!

Surprising as it is, bank downloads are very often not quite correct and they may include duplicates, errors or missing items that will only be caught by a reconciliation.

If you aren’t downloading transactions there is even more chance of making a mistake and missing something or just typo-ing an entry and not realizing it. If you have no way to check your work then you won’t automatically see that kind of error.

Another way it goes wrong is in transfers between accounts- a transfer should only be entered once and include movement from one account to the other. But if you download your checking account and it shows all the movements to your savings account, and then you download the savings account and it shows all the movements to your checking account you may have just duplicated a lot of cash in QuickBooks that isn’t really there in reality.

Most people think of reconciling as only being for bank accounts but credit card accounts, lines of credit, paypal accounts and anything else with a starting and ending balance can be reconciled.

We always reconcile active accounts for clients and strongly recommend anyone doing their own books make it a regular part of their process. I can also guarantee if you don’t reconcile your books there are errors- the only question is how big and in which direction.

On a side note- when you do reconcile, it should match! QuickBooks gives you an easy way out to enter a reconciliation discrepancy- the difference between what it should be and what it is. But that only means you’ve got a problem you are ignoring, not that you fixed the problem! If you are regularly using the discrepancy account to cover differences you may as well not bother reconciling in the first place.

And on another note- as you go through and find items that haven’t cleared in a while- more than 30 days for a credit or debit transaction or 60 days for a paper check- take them out! They probably aren’t ever going to clear. or at least investigate further to see what is going on. These items will reduce your balance (or inflate in the case of uncleared deposits) in QuickBooks so if they aren’t real and never happened in the bank they are only contributing to having your ending balance be off. Dump ’em.