Guides

How to Reconcile a Bank Statement: A Step-by-Step Guide

Reconciling a bank statement means comparing the bank’s record of your account with your own record for the same period, then explaining every difference until the two balances agree. Your own record might be a check register, a spreadsheet, or accounting software like QuickBooks.

Most people and businesses reconcile once a month, as soon as the statement arrives. Busy business accounts are often reconciled weekly.

What you need before you start

• The bank statement for the period, either the PDF or the paper copy
• Your records for the same dates
• The ending balance from your last reconciliation
• Receipts, deposit slips, and a list of checks you wrote

If you keep your books in software, import the bank’s transactions first so you aren’t typing them in by hand. QuickBooks Desktop imports .qbo files. If your bank only offers a spreadsheet download, convert it with our CSV to QBO or Excel to QBO converter, then follow our guide to importing bank transactions into QuickBooks Desktop.

How to reconcile a bank statement, step by step

1. Check the beginning balance

The statement’s beginning balance should equal the ending balance from your last reconciliation. If it doesn’t, a transaction from an earlier period was changed, added, or deleted. Fix that before going further.

2. Match deposits

Go down the statement and tick off each deposit that also appears in your records, checking the amount as well as the description. Mark anything that appears on only one side.

3. Match withdrawals

Do the same for checks (match them by check number), debit card purchases, ACH payments, transfers, and ATM withdrawals.

4. List outstanding checks and deposits in transit

Some differences are just timing:

• Outstanding checks are checks you wrote and recorded that the bank hasn’t paid yet.
• Deposits in transit are deposits you recorded that hadn’t posted by the statement date.

Both should clear on next month’s statement. If a check stays outstanding for months, contact the payee. Banks aren’t required to pay a check that is more than six months old, although they may.

5. Record bank fees, interest, and other bank-only items

The statement may show items you haven’t recorded yet: monthly service charges, NSF fees, interest earned, or an automatic payment you forgot to write down. Add them to your records.

6. Compare the adjusted balances

Adjust each side, then compare:

• Adjusted bank balance = statement ending balance + deposits in transit - outstanding checks
• Adjusted book balance = your ending balance + interest and unrecorded deposits - fees and unrecorded withdrawals

Here is a simple example with made-up numbers:

When the two adjusted balances match, the account is reconciled.

7. Track down any difference

If the balances don’t match, the size of the difference is often a clue:

• It equals one transaction. That transaction is probably missing from one side or recorded twice.
• It’s double a transaction. A deposit may have been entered as a withdrawal, or the reverse. Look for a transaction equal to half the difference.
• It’s evenly divisible by 9. This often points to a transposition error, where two digits were swapped. Entering $54.00 as $45.00 creates a $9.00 difference, and entering $1,350 as $1,530 creates a $180 difference (9 x 20).
• It’s small and round. Look for a fee or interest you haven’t recorded.

Also look for a transaction dated in the wrong month and for anything changed after your last reconciliation. If the bank made the error, contact it promptly.

How to reconcile in QuickBooks Desktop

1. Go to Banking > Reconcile.
2. Choose the account, then enter the statement date and ending balance. Check that the beginning balance QuickBooks shows matches the statement.
3. Enter any service charge or interest earned that isn’t already recorded, then click Continue.
4. Check off each deposit and payment that appears on the statement.
5. When the difference is 0.00, click Reconcile Now. QuickBooks then offers a reconciliation report you can save with the statement.

How to reconcile in QuickBooks Online

1. Open Reconcile. Depending on which navigation your company uses, it’s under Accounting or Transactions.
2. Select the account, enter the ending date and ending balance from the statement, and select Start reconciling.
3. Check off the transactions that appear on the statement.
4. When the difference is $0.00, select Finish now.

If you’d rather reconcile in a spreadsheet, our QBO to CSV converter turns a QuickBooks download into a file you can sort and filter.

Is reconciling a bank statement optional? (True or false)

False, at least in practice. No law makes a household reconcile its checking account every month, but skipping it is risky:

• You can lose protections. Under federal rules (Regulation E), you generally have 60 days after a statement is sent to report an unauthorized electronic transfer that appears on it. Miss that window and you can be held responsible for later unauthorized transfers. Your account agreement may also set deadlines for reporting forged or altered checks.
• Errors don’t fix themselves. Duplicate charges, missing deposits, and bank mistakes are much easier to resolve when you catch them within a month.
• Your balance stays accurate. Knowing what has actually cleared helps you avoid overdrafts and NSF fees.
• Businesses need clean books. Tax returns, loan applications, and financial statements all rely on accurate cash balances, and unreconciled accounts make year-end work harder.

Once it’s a habit, reconciling takes a few minutes a month, so treat it as a required step.