The basic reconciliation process in QuickBooks Online

Bank reconciliation in QuickBooks Online means matching the transactions QuickBooks recorded against the transactions your actual bank shows. You start by opening the Reconcile tool, entering your bank statement's opening and closing balances, then marking off each transaction that appears on both your statement and in QuickBooks. When everything matches, QuickBooks marks the reconciliation as complete.

The reconciliation window lives under the Accounting menu on the left sidebar. Click Reconcile, then select the bank account you want to reconcile from the dropdown. QuickBooks will show you the last reconciliation date and ask you to enter the statement date and ending balance from your bank statement.

Once you enter those numbers, QuickBooks displays two lists side by side: deposits and other credits on the left, checks and other debits on the right. Your job is to check off each transaction that appears on your bank statement. As you mark items, the difference between your statement balance and QuickBooks balance shrinks. When the difference reaches zero, you can finish the reconciliation.

Key Takeaways

  • Start reconciliation by going to Accounting > Reconcile, selecting your bank account, and entering the ending balance from your bank statement.
  • Check off each transaction in QuickBooks that matches a line item on your bank statement, working through both deposits and withdrawals.
  • Transactions that appear on your statement but not in QuickBooks need to be added to QuickBooks before you can finish reconciling.
  • If your QuickBooks balance does not match your bank statement after checking off all transactions, look for duplicate entries, missing transactions, or math errors in either system.
  • Once reconciliation is complete, QuickBooks locks that statement period so you cannot accidentally change reconciled transactions without marking them as unreconciled first.

What to do when transactions don't match

If a transaction appears on your bank statement but you have not recorded it in QuickBooks, you cannot check it off in the reconciliation window. Instead, you need to add it to QuickBooks first. Click the Add transaction button at the bottom of the reconciliation window, choose the transaction type (check, deposit, or transfer), and enter the details. Once you save it, it will appear in the reconciliation list and you can check it off.

The reverse problem happens when QuickBooks shows a transaction that your bank statement does not. This usually means the transaction has not cleared the bank yet — a check you wrote that the recipient has not deposited, or a deposit you recorded before the bank received it. Leave these unchecked. They will clear on a future bank statement, and you will check them off during next month's reconciliation.

Occasionally you will find a transaction in QuickBooks with the wrong amount or date. You can edit it directly from the reconciliation window by clicking on the transaction. Make the correction, save it, and it will update in the reconciliation list. If you need to delete a transaction entirely, do that from the main register instead — the reconciliation window does not have a delete option.

Handling outstanding checks and pending deposits

Outstanding checks are checks you wrote that have not yet cleared your bank. Pending deposits are money you recorded in QuickBooks but the bank has not processed yet. Both are normal and expected. During reconciliation, you will see these transactions in QuickBooks but not on your bank statement, so you will leave them unchecked.

QuickBooks keeps a running list of outstanding items. After you complete a reconciliation, you can view the Reconciliation Report to see which transactions are still outstanding. This report shows you what to expect on your next bank statement and helps you understand why your QuickBooks balance differs from your bank balance on any given day.

If an outstanding check or deposit stays outstanding for more than 30 or 60 days, investigate. A check that never clears might have been lost in the mail or the recipient may not have deposited it. A deposit that never appears might indicate a bank error or a problem with how you submitted it. Contact your bank or the other party to track down what happened.

Fixing reconciliation errors and starting over

If your reconciliation will not balance and you cannot find the problem, QuickBooks lets you undo the reconciliation and start fresh. Go to Accounting > Reconcile, select the account, and look for the reconciliation you want to undo. Click the three dots next to it and select Undo. This removes the reconciliation lock and puts all those transactions back into an unreconciled state so you can try again.

Before you undo, print or take a screenshot of the reconciliation report showing which transactions were checked off. This gives you a record of what you thought was reconciled and makes it easier to spot what went wrong the second time through.

Common reconciliation errors include duplicate transactions (you recorded the same deposit or check twice), transposed numbers (you entered $1,250 instead of $1,520), and timing differences (a transaction cleared the bank on a different date than you expected). Work through your bank statement line by line and compare it to the QuickBooks register. The error is usually in one of those two places.

What happens after reconciliation is complete

Once you finish reconciliation and QuickBooks shows a zero difference, click Finish now. QuickBooks marks all the checked transactions as reconciled and locks that statement period. This lock prevents you from accidentally changing a reconciled transaction without meaning to.

If you need to edit a reconciled transaction later, you must first unreconcile it. Open the transaction, make your change, and QuickBooks will ask you to confirm that you want to change a reconciled item. After you save the change, the transaction becomes unreconciled again and will appear in your next reconciliation cycle.

Reconciling regularly — ideally monthly, when your bank statement arrives — keeps your records accurate and makes problems easier to spot. A reconciliation that is only a month behind is much faster to fix than one that is three months behind, because there are fewer transactions to review.

Reconciling multiple accounts and handling transfers

If you have more than one bank account in QuickBooks, you reconcile each one separately. Go through the same process for your checking account, savings account, money market account, or any other account linked to your bank. Each reconciliation is independent.

Transfers between your own accounts can be tricky. When you transfer money from checking to savings, QuickBooks records it as a withdrawal from checking and a deposit to savings. Both transactions will appear on your bank statements. During reconciliation, you check off the withdrawal on the checking account reconciliation and the deposit on the savings account reconciliation. They balance each other out across your two accounts.

If you see a transfer on your bank statement but QuickBooks shows it as a regular deposit or withdrawal instead of a transfer, edit the transaction to change its type to Transfer. This tells QuickBooks to link the two sides of the transaction together and prevents confusion during reconciliation.

Frequently Asked Questions

What if my bank statement and QuickBooks differ by a few cents?

A small difference usually means a rounding error or a bank fee you did not record. Check your bank statement for any fees, interest, or adjustments. If you find one, add it to QuickBooks as a transaction. If you cannot find the source of the difference after checking carefully, you can create a small adjustment transaction to make the accounts match, though this should be rare.

Can I reconcile a bank account that is linked to QuickBooks through automatic downloads?

Yes. Linked accounts work the same way — you still need to reconcile them monthly. The automatic downloads save you from typing in transactions manually, but they do not replace reconciliation. You still check off each downloaded transaction against your statement to confirm everything is correct.

What if I reconciled the wrong month by accident?

You can undo any reconciliation by going to Accounting > Reconcile, finding the reconciliation you want to undo, clicking the three dots, and selecting Undo. This removes the lock and lets you re-reconcile with the correct statement. You can then reconcile the correct month afterward.

Do I have to reconcile every month?

You do not have to, but monthly reconciliation is the standard practice because it catches errors early and keeps your records accurate. If you reconcile less often, errors compound and become harder to find. Most small businesses and sole proprietors reconcile monthly when the bank statement arrives.

What if a transaction shows in QuickBooks but my bank says it never posted?

Contact your bank to confirm the transaction status. If the bank has no record of it, you may need to cancel it or resubmit it. Once the bank confirms it will not post, delete the transaction from QuickBooks. If the bank says it will post soon, leave it unchecked during this reconciliation and it will appear on next month's statement.