How To Reconcile In QuickBooks Online And Desktop In 2023?

Well, if you’re a business, whether small or big, you’re required to balance your checkbook. Similar to this action, it is crucial to review the accounts in QuickBooks to ensure your transactions match your credit card and bank statements. If your Accountant had you do this recently, know that it’s quite vital to monthly reconcile your bank statements to QuickBooks Online as it is a major part of your bookkeeping.

However, if you’re trying this for the first time, don’t worry; the process is quite straightforward and doesn’t take much of your time. But, before we learn how to reconcile in Quickbooks Online, we should first understand its importance and what exactly it is. So, to get a clear idea of this entire process, ensure not to miss any part.

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Understanding Reconciliation In QuickBooks Online

Now, first thing first, what exactly is reconciliation in QuickBooks Online? Well, you may have guessed this already, similar to QuickBooks Desktop, bank reconciliation for business accounting in QB Online differs. So, even if you’ve typed in a transaction into QB Online using the bank feed, forms, or a third-party app, it’s still necessary to reconcile the bank accounts in QuickBooks.

So, you may ask, what exactly do I need to reconcile? Usually, you must reconcile your credit card, checking, and savings accounts. A few individuals may even consider reconciling their liability and present asset accounts, and sometimes even equity. However, that will not be our concern in this guide, and we’ll only look at how you can reconcile bank statements in QuickBooks Online.

Now, before we finally move on to the steps for reconciliation, you must know why exactly reconciliation is crucial. The primary purpose of entering, comparing, and matching data in QuickBooks is to confirm that data is balanced and accurate. With this, you’ll know that there is no missing transaction. Furthermore, storing this data will also help when you need to file your taxes. So, while this is helping you for record-keeping purposes, it’s also helping you save money on taxes.

So, now you know the importance of reconciliation. Next, let’s check how you can do it using QuickBooks Online and Desktop.

How To Reconcile An Account In QuickBooks Online?

Understanding Reconciliation In QuickBooks Online

So, now you know the importance of reconciliation. Next, let’s check how you can do it using QuickBooks Online and Desktop.

How To Reconcile An Account In QuickBooks Online?

With your bank statement, you can easily compare all your transactions with those you’ve typed into your QuickBooks. And, as mentioned, if all those transactions match, you know your accounts are accurate as well as balanced. Also, it’s generally suggested that you reconcile your credit card, checking, and savings accounts monthly.

So, here is how to reconcile an account in QuickBooks Online.

Step 1: Reviewing Your Opening Balance

If this is your first time reconciling an account, it’s essential that you review your opening balance. This is because it should match your current bank account balance for the day you started tracking your transactions in QuickBooks.

Entering And Managing Opening Balances In QB Online

To have accurate financial records with you, you must possess an accurate and organized chart of accounts. So, let’s learn how you can enter and manage an opening balance credit card, bank, and other such accounts.

Entering An Opening Balance

QuickBooks can automatically download your transactions for a certain date if you connect your credit card and bank accounts. It not only totals them up but can also enter your date and opening balance.

However, if you don’t want to connect your account, you also have the option to type in the opening balance manually.

Firstly, ensure the amount you want to type in for the opening balance.
Then, head to the “Setting” section and click “Chart of accounts.”
Next, select the “New” option to set up your account.
After that, go to the open balances section. From there, select the date from where you want to start tracking the finances.
Now, type in your account balance for the selected date.
Finally, hit the “Save” button.

With this, you’ll now be able to start tracking your new transactions in QuickBooks.

Editing An Opening Balance

So, if you’re looking to add transactions older than your opening balance, you will be required to edit the starting date as well as the balance. You should do this to set a free starting point in order to prevent your QuickBooks account from counting the same transactions twice.

Firstly, head to the “Settings” section and click “Chart of accounts.”
Then, look for your account and tap on “View register.”
Next, find your opening balance entry.

Note: You can use the sort column to look for the oldest entries.

After that, tap on the opening balance entry.
Now, make changes in the date and the amount. Also, you can click on the “Edit” button to make these changes.
Finally, hit “Save.”

Now, this is how you type in and edit your opening balances in QuickBooks. However, if you don’t want to get into this step and skip it, you can do this by connecting your credit cards and bank to online banking. This helps you automatically download transactions and type in the opening balance.

Connecting Bank And Credit Card Accounts To QuickBooks Online

With bank feeds and online banking, you can save significant time as there is no need to enter anything manually. After you connect the account, your transactions will get downloaded as well as categorized automatically. You’ll not have too much in this as you simply need to approve them, nothing else.

First Step: Connecting A Credit Card And Bank Account

You can connect multiple of your personal and business accounts, regardless of how many there are.

Firstly, head to the “Bookkeeping” section and select “Transactions”, and then click on “Bank transactions.”
Then, if this is your first time setting up a bank account, choose the “Connect account” option. Or, if this is not your first time, you must select “Link account.”

Note: In case you are moving from QB Desktop, you’ll need to connect the credit card and bank accounts again for security reasons.

Next, type in your credit card, credit union, or bank name in the search field.

Note: If you cannot locate your bank name and need to add your transaction, you can go for the manually uploading the bank transactions option.

After that, hit “Continue.” Once you do this, sign in to your bank account using your credentials.
Moreover, make sure to follow all the on-screen instructions carefully. This typically involves security checks which your bank requires. Usually, it will take some minutes to finish the connection process.
Now, choose the accounts you want to connect and then select the account type from the drop-down. Make sure to pick the account type that suits your chart of accounts in QB.
Then, decide how far you need to download the transactions. A few banks allow you to download the last 90 days’ transactions. While on the other hand, some banks let you only download the last 24 months’ transactions.
Finally, hit connect.

Second Step: Downloading Recent Transactions

Now, this step involves downloading your recent transactions. However, don’t worry about this, as QuickBooks can download transactions, so there is no need to enter them manually. You just need to refresh the bank feed so you can download your latest transactions.

Firstly, head to the “Bookkeeping” section. Then, select “Transactions” from there and click “Bank transactions.”
After that, hit “Update.”

Third Step: Categorizing Downloaded Transactions

As QuickBooks finishes downloading your transactions, the next thing you must do is review and categorize your transactions. This will help you confirm you’ve categorized it right.

Step 2: Starting A Reconciliation

You can start reconciling as you now have a monthly credit card or bank statement. However, if you have multiple months of reconciling, it’s recommended that you only do a single statement at a single point of time. So, it’s better to start with the oldest statement.

Firstly, if your accounts are already connected to online banking, match and categorize all downloaded transactions.
Then, head to the “Settings” section and select “Reconcile.” In case this is your first time reconciling, you must hit the “Get started” button.
Next, choose the account you like to reconcile from the “Account” drop-down. Don’t make any mistakes; you must select the same one on the statement.
After that, you must review your “Beginning balance.” Also, ensure the beginning balance in QB matches the one you mentioned in the statement.
Now, type “Ending balance” and “Ending date” on the statement. A few banks mention the ending balance as a “closing balance” and a “new balance.”
In case you see it, you’ll need to review the “Last statement ending date.” This shows your end date of the last reconciliation. So, your present bank statement will start the day after.
Finally, once you get ready to start, hit “Start reconciling.”

Step 3: Comparing The Statement With Quickbooks

So, the last step involves comparing your transactions on the statement with that of QuickBooks. Ensure you don’t rush and review them one at a time. You might find it tricky to confirm the right transactions and dates in QuickBooks. However, completing the process matters.

How To Reconcile An Account In QuickBooks Desktop?

After QB Online, let’s learn how to reconcile an account in QuickBooks Desktop. Just like before, it’s suggested to reconcile your credit card, savings, and checking accounts every month. So, let’s start the process.

Step 1: Reviewing The Opening Balance

Before you start this process, you must back up your company file. Here is how you can schedule automatic backups as well as back up the files manually.

First Step: Creating A Backup Company File

By backing up your company files, you can save everything present in your company file. Now, this usually includes your templates, images, accounting data, logos, letters, and related files such as Cash Flow Projector, Loan Manager, Business Planner, and QuickBooks Statement Writer. While you can back up all this, you cannot back up the payroll forms with it. If you want to back up that, make sure to stick with us.

Now, as discussed, there are multiple ways to back up your data. You have the option of either backing it up automatically or manually. Let’s check both methods one by one.

Scheduling Automatic Backups

To make your work easier, QuickBooks automatically backs up your company file.

Firstly, head to the “File” menu in QuickBooks and click on “Switch to Single-user Mode.”
Then, again head to the “File” menu and look for “Back up Company.” Make sure to click on “Create Local Backup.”
Next, when you’re on that window, tap “Local Backup” and hit the “Next” button.
After that, in that section, tap “Browse” and choose the location where you want to back up the company file.
Moreover, pick the number of backups you like to keep. (Optional)
Now, when you’re in the “Online and Local Backup” section, choose the “Complete verification” option. With this, a test will be run to tell you that the backup file is in the right shape.
So, once you’re ready, just hit “OK.”
Select the “Save it now and schedule future backups” option and click “Next.” You can also select the “Only schedule future backups” option if you don’t wish to save a backup now.

Then, hit the “Save backup copy automatically when I close my company file” checkbox. Also, choose the number of times between backups.
Next, in order to create a schedule, click “New.” Make sure to fill the data fields correctly so you can make a backup schedule. You can also set a specific day or time of the week.

After that, once you finish selecting your schedule, hit the “OK” button. Now, QuickBooks will ask you to type in your Windows sign-in password. With this, QuickBooks will have permission to execute the scheduled backup.
Finally, hit “Finish” once you finish creating your backup.

QuickBooks can simultaneously create a backup as well as schedule future backups. After you finish setting it up, you’ll receive a confirmation message.

Backing Up The Company File Manually

Well, if you wish to back up your company files manually, which you can do anytime, here are the steps for that:

Firstly, head to the “File” menu in QuickBooks and click on “Switch to Single-user Mode.”
Then, again head to the “File” menu and look for “Back up Company.” Also, click on “Create Local Backup.”
Next, when you’re on that window, tap “Local Backup” and hit the “Next” button.
After that, in that section, tap “Browse” and choose the location where you want to back up the company file.
Moreover, pick the number of backups you like to keep. (Optional)
Now, a test will be run to tell you that the backup file is in the right shape.
So, once you’re ready, just hit “OK.”
Finally, tap on “Save it now. Then, hit “Next.”

Backing Up The Payroll Forms

With QuickBooks, you cannot automatically back up the payroll forms. However, there are some ways by which you can save them safely. While you can print their copies, you can also save them on the hard drive. Furthermore, if you’re using QuickBooks Enhanced Payroll, you can save them as PDFs.

So, if you require the accountant to edit your payroll tax forms, you can just send the folder with your saved payroll forms.

Firstly, open your Windows “Start” Menu.
Then, look for “File Explorer” and open it.
Next, search for the “Tax Forms” folder on your computer. This folder will contain the data for all your payroll.
After that, save the folder and forward it to your accountant. Also, you may need to forward them the backup company file too.
Now, once they finish restoring, your accountant will need to put the Tax Forms folder in the folder with your company file as well.
Finally, once they finish reviewing, make sure to ask your accountant to copy as well as send the Tax Form folder to you.

Second Step: Adjusting The Backup Settings

Well, in the future, you may need to look at the last time you backed up your company file. Here’s how you check that:

Firstly, head to the “File” menu.
Then, from there, click on “Back up Company.”

Once you follow this, you’ll be able to see the date as well as the time at the menu top.

Now, if you’re looking to change the backup preferences, you must follow these steps:

Firstly, head to the “File” menu and select “Back up Company.” After that, tap on “Create Local Backup.”
Now, hit the “Options” button.

Finally, make the changes you want and hit “OK” to save your changes.

Now, this was a part of reviewing your open balances, which you must do before you start with reconciliation.

However, if this is your first time reconciling an account, it’s essential that you review the opening balance. Not sure how you do that? Well, here is what you need to do.

In the following section, we’ll learn how to enter an opening balance for a credit card, bank, and other account types in QuickBooks Desktop.

First Step: Entering An Opening Balance

Follow these steps based on the account type the opening balance is for:

Credit Card Or Bank Accounts

You are able to enter an opening balance for your new bank account as well as the old one.

Firstly, you must sign in to the bank’s site in order to get the bank statements.
Then, open your QB Desktop, head to the “Company” section, and select “Chart of Accounts.”
Next, right-click on the “Chart of Accounts” and click “New.”
After that, choose “Credit Card” or “Bank” for your account type. Then, hit “Continue.”
Moreover, you should name your account. This will help you tell them apart, especially when you have multiple accounts at the same bank or of the same type.
Now, enter the details in all the data fields on your screen.
Then, tap on “Enter Opening Balance.” After this, when you need to edit the opening balance, the button you’ll need to click is “Change Opening Balance.”

Finally, once you enter the opening balance, hit the “Save & Close” button to record these changes.

Handling Outstanding And Pending Payments

You should not worry in case you have outstanding transactions for your credit card and real-life bank accounts. After you have the bank statement and the outstanding transactions cleared the bank, you can return back to make changes in the opening balance entry.

Firstly, you must sign in to the bank’s site in order to get the bank statements.
Then, open your QB Desktop, head to the “Company” section, and select “Chart of Accounts.”
Next, right-click on the account and tap the “Edit” button.
After that, hit the “Change Opening Balance” option.
Now, make changes in the amount. Other than that, you can adjust the date.
Finally, once you finish making the changes, hit the “Record” button to save the changes.

Liability, Asset, And Other Account Types

Firstly, you must sign in to the bank’s site in order to get the bank statements.
Then, open your QB Desktop, head to the “Company” section, and select “Chart of Accounts.”
Next, right-click on the “Chart of Accounts” and click “New.”
After that, you need to select “Loan,” “Equity,” or “Fixed Asset.” If you have other account types, from the drop-down, select “Other Account Types.” Then, hit “Continue.”

Moreover, you should name your account. This will help you tell them apart, especially when you have multiple accounts at the same bank or of the same type.
Now, enter the details in all the data fields on your screen.
Then, tap on “Enter Opening Balance.” After this, when you need to edit the opening balance, the button you’ll need to click is “Change Opening Balance.” Things you’ll enter in this section will be based on how you like to handle past transactions.
Finally, once you enter the opening balance, hit the “Save & Close” button to record these changes.

Creating A Journal For Your Opening Balance (Alternative)

You can also enter your opening balance as a journal entry, which is an alternative to the primary method we mentioned. However, know that this process can be complicated. Hence, if you decide to use this method, we suggest you take your accountant’s help.

Firstly, head toward the “Company Menu” and click “Make General Journal Entries.”
Then, you should select the date for your journal entry. Make sure you mention the date when you picked the opening balance.
Next, from the “Account” drop-down, you must choose the account you’re trying to type in the opening balance.
After that, you must type in the balance for your current accounts from when you picked it. Based on the account type:
- Asset: For this, use the Debit column to type in the opening balance.
- Equity and Liability: For this, use the Credit column to type in the opening balance.
Moreover, from the “Account” drop-down, select your “Opening Balance Equity” account.
Now, in the opposite column, make sure you type in the same opening balance amount you did in the first line. If you used the Credit column to type in the first amount, you must use the Debit column to type in the next one.
Finally, hit the “Save & Close” button at the end when you finish making the changes.

You can create more journal entries to enter sales tax payable, accounts payable, accounts receivable, and things you didn’t include in the first journal entry.

Second Step: Checking The Entry Of The Opening Balance

So, once you’re done entering the opening balance, you must head to your account register and ensure everything is correct. Also, it’s vital to note that there should be no remaining balance in your Opening Balance Equity account.

Firstly, head toward the “Lists” menu. Then, tap on “Chart of Accounts.”
Next, look for the “Opening Balance Equity” account and open it.
Now, confirm that the account balance is zero.

However, if the amount isn’t zero, you should not worry about it. Simply write down your remaining balance and run the last year’s Balance Sheet Report.

Firstly, head to the “Reports” menu and select “Company & Financial.”
Next, click on “Balance Sheet Standard.”
Then, using the “Dates” drop-down, you must select the “Last Fiscal Year.”
Afterwards, go to the “Equity” section and look for your “Retained Earnings” balance.
Finally, compare both balances, i.e., Retained Earnings and Opening Balance Equity accounts.

Suppose the balances match with each other, perfect! However, in case they don’t match, contacting your accountant is recommended. They can help you balance out your accounts.

Step 2: Preparing For The Reconciliation

Now, once you’re done reviewing the opening balance, the next thing you must do is prepare yourself for the reconciliation. Ensure to include all transactions you plan to reconcile for the particular bank statement period. You must wait if you have transactions not mentioned on the statement and haven’t cleared the bank.

Step 3: Starting The Reconciliation

After you receive your complete bank statement, you can begin reconciling. Also, if you’re looking to reconcile multiple months, starting with the oldest bank statement is suggested. Furthermore, you should reconcile each of the months one by one.

Firstly, head toward the “Banking” menu and select “Reconcile.”
Then, from the “Account” field, choose the credit card or bank you like to reconcile.
Next, the “Statement Date” will be filled in automatically. You can make the changes if it doesn’t match your bank statement.
After that, QuickBooks will automatically enter your “Beginning Balance.” To get this number, QuickBooks will use the ending balance of the last reconciliation.
Moreover, enter your “Ending Balance” mentioned on the bank statement.
Now, type in the “Interest Earned” and “Service Charge” mentioned on the bank statement. Make sure not to include the charges already mentioned in QuickBooks.
Finally, review the field to check for the correct information. If the details are correct, hit the “Continue” or “OK” button.

Now, this is when your beginning balance matches with the statement. But what if they don’t match? Don’t worry; there are multiple ways to solve this issue.

If the numbers don’t match, you should click “Locate Discrepancies.” By doing this, you’ll get reports that you can use to look for discrepancies and other such reconciliation problems.
If you want to start over from scratch, click “Undo Last Reconciliation.”

Step 4: Comparing The Bank Statement And QuickBooks

For the reconciliation, you have to compare the transactions list that is on the bank statement with what you have in QuickBooks. Also, ensure you have the correct transactions and dates. Once you finish reviewing the statement, you’ll know that QuickBooks has everything on it.

Before Beginning The Process

Follow these steps to make the reconciliation process easier:

Firstly, click “Hide transactions after the statement’s end date” to hide any unnecessary transactions that are not part of the statement period you’re currently working on.
Then, for reconciling a credit card account, you’ll need to use the sections such as “Charges,” “Cash Advance,” “Payment,” and “Credits.” Don’t get confused; work on one section only at a time.
Next, if you’re reconciling for online banking, click on “Matched.” After that, from the bank statement, type in your “Statement Ending Date.” This helps you automatically select transactions that QuickBooks matches and downloads.

Note: In the register, the lightning bolt symbol next to the transactions shows the matched transaction. Once you reconcile it, the lightning bolt will get replaced with a checkmark.

After that, in order to sort the list, select the “title” or “header” of a column.
Now, you should resort to the list if you find the transactions in QuickBooks to be more than there on the bank statement.

Matching The Transactions

So, once you get ready, you should start with the first transaction on the bank statement.
Look for the exact one that is in the “Reconciliation” window in QB.
Now, compare both transactions. Don’t forget to put a checkmark in the column if they match. By doing this, you’ll reconcile the transaction.
Also, ensure to compare all the transactions on the statement with what you have in QuickBooks. The “Cleared balance” will become less as you add or clear transactions to the reconciliation. Meanwhile, the amount will increase if you add or clear deposits and other such amounts.

Now, if a transaction doesn’t show on the statement, you must not mark it as reconciled. Let’s look at a few ways by which you can confirm things are matching.

Head to the “Items you’ve marked cleared” section to check the total amount and number of transactions you have added to the reconciliation. Other than that, there are numerous banks that offer transaction summaries on bank statements. You’ll have to compare all the transactions to see if anything is missing.
In case you need to get more details or edit a particular transaction, you’ll need to select it and double-click on it.
If you want to change the information you’ve entered while performing the “starting your reconciliation” process in Step 3, hit “Modify.” The ending balance service charges and interest details will be shown in the section that is next to it.

Finally, once you reach the end, the difference between the QuickBooks and bank statements should be zero. After that, click on “Reconcile now.”

Balances Are Not Matching; What’s Next?

Well, sometimes it’s possible that the difference will not be $0.00. However, don’t worry; QuickBooks provides various ways to fix this issue.

If you have bank accounts, QB will open the “Reconcile Adjustment window.” For this, you have multiple options:

Return to Reconcile: Head back to the reconciliation to review everything again.
Enter Adjustment: To finish the reconciliation, you are able to force QB to make an adjustment in order to balance everything. This should only be performed if you’re sure that you’ve entered the right transactions in QuickBooks.
Leave Reconcile: You can save the reconciliation to edit or review the current transactions that are causing problems. You always have the option to return and complete the reconciliation at a later time.

After that, the general entry will go into an expense account, which is known as Reconciliation Discrepancies.

Reviewing Your Reconciliation Adjustment

You can review your last Reconciliation report for which you adjusted the reconciliation in order to see all of the adjustments on the list. With this, you’ll get a clear picture of the cleared transactions as well as the changes made after the transaction, as these changes may not appear in the discrepancies.

Firstly, head toward the “Edit” menu and select “Find.”
Then, from the “Find” menu, click on the “Advanced” tab and then hit “Memo.”
Now, when in the “Memo” field, enter “Balance Adjustment” and hit “Find.”

Reviewing Cleared Transactions

Do you want to review all your cleared transactions? Here’s how you can do it:

Firstly, head to the “Reports” section. After that, click on “Reports Center.”
Then, look for the “Previous Reconciliation” report and open it.
Next, tap on the account you reconciled. Then select either “Summary,” “Detail,” or “Both.”
After that, click on “Transaction cleared.”
Finally, hit “Display.”

If you own other types of accounts, QuickBooks offers you the “Make Payment” window option. With this, you can enter a bill or write a check to cover the pending balance. Also, hit “Cancel” if you are not looking to record the payment.

Final Steps: Reviewing The Reconciliation

Once you finish reconciling, you can click on “Display” to check the Reconciliation report and hit the “Print” button to print it. This is all you need to do.

However, if you like to review the reconciliation report at a later time, follow these steps:

Firstly, head to the “Reports” section. After that, click on “Reports Center.”
Then, look for the “Previous Reconciliation” report and open it.
Finally, tap on the account you reconciled. Then select either “Summary,” “Detail,” or “Both.”

How To Reconcile Credit Cards In QuickBooks?

Whether you’re an accountant or a business owner, if you’re using QuickBooks, it’s necessary that you reconcile your credit cards in QuickBooks. This helps you ensure that all the financial records are up-to-date and accurate.

However, before you start reconciling, be sure to back up the company file and review the opening balance. So, now let’s look at how you can reconcile credit cards in QuickBooks:

Firstly, from the top menu, head toward the “Banking” section and click “Reconcile.”
Then, from the “Account” field, select the credit card or bank account you wish to reconcile.
Next, the “Statement Date” will be filled in automatically. Make changes so it matches your statement.
Also, QB is known to enter the Beginning Balance automatically.
After that, type in your “Ending Balance” mentioned in the statement.
Now, type in your “Interest Earned” and “Service Charge” mentioned in the statement. Also, avoid adding charges that you have already typed in.
Finally, review the field. If you find the details correct, hit the “Continue” or “Ok” button.

Conclusion

So, this is how to reconcile in Quickbooks Online and Desktop. It is highly recommended that you reconcile your bank statements monthly in QuickBooks to avoid any wrong or inaccurate data. Also, if you find the process complicated, don’t hesitate to take the assistance of your accountant.

While reconciling in QuickBooks is simple, sometimes you can suffer errors that may stop your progress. But don’t worry, as MWJ Consultancy is here with their professional assistance. Our technicians know every nook and corner of QuickBooks and are available to provide you with fast and effective support. To enhance your QuickBooks using experience, contact us at:

Email: info@mwjconsultancy.com

Number: +1 877 469 0298