If you are looking for how to reconcile in QuickBooks Online, look no further. We’ll show you how to reconcile your accounts in Intuit’s web-based accounting software, from accounts receivable to payroll liabilities to undeposited funds.
By keeping your accounts in balance, you can make smarter business decisions.
Account Reconciliation: What Is It?
Account reconciliation involves balancing your ledger. It is the practice of matching up your account transactions with your bank, loan, liabilities, accounts receivable, and credit card statements.
Why Reconciling Your Accounts Is Important
Reconciling your accounts in QuickBooks Online should happen at least once a month when you receive your statements. It’s important to make sure you aren’t missing anything that could cause your accounts to get out of balance.
This process will provide you with accurate financial data for your small business. It’s critical to close eye on how much money you currently have, how much money is coming in and how much you owe. As you update your bank statements and other transactions, your balance sheet and profit and loss statements will be automatically updated by QuickBooks Online.
Reconciliation Can Help
- Identify any discrepancies.
- Recognize potentially fraudulent transactions that you didn’t authorize so that you can take action.
Besides, you’ll need the information when it’s tax time. It’s a lot easier to reconcile monthly than to try to recreate your financial information when your taxes are due.
How to Reconcile Accounts in QuickBooks Online
When learning how to reconcile a bank account in QuickBooks Online, you’ll first want to click on the gear icon near your company name on the home page. Then, click on reconcile. Start with your bank accounts. After selecting the bank account and making sure QuickBooks is connected to your accounts online, you’ll need to fill in the beginning balance, ending balance and statement end date.
Next, you will start to match transactions that appear in both QuickBooks Online and your bank statement. Pay attention to the difference in the upper right. Your goal is to get that difference down to zero, which will show a match of all transactions.
When you have reconciled all your bank deposits and withdrawals, your cleared balance should match the statement ending balance and the difference should be zero. If that isn’t the case, continue to investigate until you find the mismatch. Once you hit zero on the difference, click finish to reconcile.
Repeat this process for any bank accounts, credit-card accounts or other accounts you have.
Knowing what money you have coming in is important to managing cash flow. Your accounts receivable (A/R) are tracked in a single account on the chart of accounts (COA) by QuickBooks Online, which tracks all of your outstanding invoices. As you create invoices in the system, they are added to your accounts receivable totals. As your invoices are paid, they are entered into the system to close out the invoice.
The process for reconciling accounts receivable will take you through the same steps as any other account. Knowing how to reconcile accounts receivable in QuickBooks Online will mean navigating back to the home page, clicking on the gear icon and selecting reconcile again. Instead of selecting your bank or credit card accounts, you will instead select the chart of accounts this time.
Check the Differences
If your difference is zero, you are good to go. If not, you will need to investigate further to see what’s not lining up.
Separately, you will want to run an accounts receivable aging report. This will show you what your customers owe and how old debts have become. From the Reports menu, select Customers & Receivable and then A/R Aging Detail. You’ll want to compare this to the Open Invoices report to make sure the balances align. You can find the Open Invoices Report by going to Reports > Customers & Receivables > Open Invoices.
All of these reports should agree and align with your COA. An easy way to compare the two reports is by selecting multiple windows from the View menu. This can help you spot discrepancies as well as remind you to ramp up collection efforts for overdue invoices.
Each pay period, your payroll needs to match your payroll expenses recorded in your ledger. Follow these steps to learn how to reconcile payroll liabilities in QuickBooks Online.
First, review your payroll totals. Do this by going to Reports > Payroll Details. Select the quarter, then Summary by Employee, and run the report. Next, do the same thing for deductions by going to Reports > Payroll Deductions/Contributions. Enter the date range and run the report.
You’ll want to compare these to your accounts to make sure the amounts paid match.
Unposted funds show up in a clearing account for payments that have been taken in but not yet deposited in the bank account. As such, they won’t such up on bank statements.
As you receive funds and enter them into QuickBooks Online, you want to select the appropriate invoice to match them up. This will clear out account balances. When you deposit the funds into your bank account, they will no longer show on the undeposited funds list.
To view your undeposited funds, go to List > Chart of Accounts > Undeposited Fund and select the quick report.
How to Change Beginning Balance
If the opening balance to an account is incorrect, you can edit it. How to change beginning balance when reconciling in QuickBooks Online will mean going to Settings > Chart of Accounts and locating the account which has an incorrect balance.
Go to the Action column and choose View Register. From there, you can click on the opening balance and edit it. Make sure to save when you are done as QuickBooks Online won’t automatically save your edits if you leave the page.
If your opening balance doesn’t match your bank statement, you will need to resolve this issue before you can reconcile your accounts.
Managing Your Business
If you think financial management is one of the more difficult aspects of running your small business, you’re not alone. Indeed, accounting can be a tedious process. If you are diligent about using QuickBooks Online for your business, however, much of the bookkeeping tasks are handled automatically.
Considering that nearly 30% of small businesses fail because owners run out of money, it’s crucial that you have a handle on what’s happening when it comes to finances and forecasting. Get in the habit of reconciling your accounts monthly and reviewing financial reports.
Balancing the books through reconciliation makes sure financial data is entered properly and accounted for in the program. It can help you monitor cash flow, make sure accounts receivable and accounts payable don’t fall through the cracks and forecast future profitability.