We say it time and time again - it’s vital to reconcile on a regular basis! But, what does that really mean and how do you reconcile? And, why bother?
To reconcile, in accounting terms, means you compare two sets of reports to make sure the numbers match up. This involves your internal bookkeeping records and your bank account, credit card statement, or similar. It’s a simple process of verification, but can be a huge life saver. You should get in this habit of doing this - you’ll catch mistakes sooner and be able to adjust accordingly quicker.
Reconciliation should happen on a monthly basis since most statements arrive monthly. This is also a short enough amount of time that if things don’t align, you will be able to fix them without too many issues (hopefully!).
Once month-end comes, pull up your bookkeeping/accounting records (for us, it would be QuickBooks). Then, pull up your bank account, credit card statement, or other financial account and start comparing each and every transaction, deposit, withdrawal, and balance. This is putting reconciliation simply, but the process needs to be done correctly.
Reconciling is really your best friend and life saver when it comes to your bookkeeping records. Without it, your books would be chaos and you’d have no idea where things went wrong or how. By reconciling on a monthly basis, you catch any errors right away and correct them accordingly so your accounts will line up again. If your accounts aren’t in harmony, something is wrong and needs to be addressed. Without reconciling, you’d have no way of knowing.
At Skynar Bookkeeping Services, we use QuickBooks, the leading accounting software for small to mid-size businesses. QB has put together an entire guide to reconciliation, which they keep updated as their software changes. You can view the full guide here: https://quickbooks.intuit.com/learn-support/en-us/undo-reconciliation/learn-the-reconcile-workflow-in-quickbooks/00/186429
If you aren’t positive in your reconciliation skills, consider reaching out to a reputable bookkeeper or accountant. They can give you instruction and advice or even take over your books altogether, if you feel that’s best. Either way, reconciling needs to be done and done correctly! Consider the best solution for you and your business today.