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How to Reconcile Accounts in Quickbooks Online

Reconciling accounts in Quickbooks online generates a reconciliation report – a document that shows how different kinds of payments for a certain task are different. It shows whether or not the appropriate balances are being kept.

Reconciliation reports are used by companies to make sure that all of their accounting entries are in order. Organizations have to send in yearly accounts that sum up everything that happened in the past year.

The report helps with the auditing process that makes sure the financial statements of a company are correct. With Quickbooks, companies can quickly match up to their bank statements.

Quickbooks makes it easy to make sure that all transfers are correct by matching details from financial records and company accounts.

Companies can link their banking accounts, PayPal accounts, credit cards, and other accounts to Quickbooks so that each account's Quickbooks Reconciliation Report is made automatically.

Why is it necessary to reconcile accounts in Quickbooks online?

In QuickBooks Online, your bank accounts' reconciliation is completely separate from QuickBooks Desktop. It’s a separate module. This includes tools like the chart of accounts, the check register, and the bank feed.

Even if you have used forms, bank feeds, or third-party apps for entering transactions into Quickbooks Online, you still have to reconcile the banking accounts in QuickBooks.

Most of the time, you'll have to balance your savings, checking, and credit card accounts. Some people could perhaps reconcile additional current accounts, liability accounts, or equity.

You must reconcile your banking accounts once a month, preferably around the time you receive a notice that your financial statement is ready.

QuickBooks Online agrees with what your credit card or bank company says about how much money you have, how much you spent, and how much you earned.

Even if only for a few minutes, the balance at the end of one month must be the same as the balance at the beginning of the next month. And the balance in your QuickBooks Online account at the end of the previous month should fit the balance on your financial statement.

In QuickBooks Online, your bank reconciliations will probably be done by your accountant. If the chart of accounts and bank feeds are among the most important parts of QuickBooks Online, account reconciliation is an extremely crucial aspect of your financial data every month.

What are the benefits of reconciling accounts in Quickbooks online for painting firms?

Reports are important, but bank reconciliation is even more essential for a small business like painting firms to stay healthy. If your bank reconciliation is up-to-date and all the balances match, 98 percent of the file is healthy.

This important accounting task could be the best way to figure out how long it will take your accountant to clean up your QuickBooks Online file.

It is quite crucial to do a bank reconciliation once in a while to look for signs of fraud or mistakes in accounting and bookkeeping.

This is especially important for your painting business if it has limited funds — where every expense counts. Then, you can ensure that your painting company is doing well and will never be surprised.

Prerequisites: All you need to know before starting the reconciliation process is an understanding of how important it is to follow the rules. And the rules plus steps are below. So, let’s get started!

How to reconcile accounts in Quickbooks online 2022

Now, let’s get to how to reconcile accounts in QuickBooks Online.

Step 1: Find the reconciliation page

You can get to the Reconcile page in two ways. Click on "Accounting" in the left side panel and click on "Reconcile."

You can also click on "Tools" and then "Reconcile" from the gear menu. You will get reach the same place either way.

Once you're on the Reconcile page, use the drop-down menu to choose the account you would like to reconcile.

Step 2: Pick an account

On the Reconcile section, you'll get a question: "Which account do you want to reconcile?" and a drop-down menu with every one of the added accounts.

From the menu, choose an account and click "Reconcile." When reconciling, please keep in mind that you can start saving what you've done so far and return to the steps later.

In this scenario, you should click on Resume reconciling.

Step 3: Type in the information from your banking statement

There are 3 main areas within a Reconcile window:

  • Opening balance

  • Ending balance

  • Ending date

Locate the balance at the end and ending date of the statement on the banking statement shared with you and type this data into the appropriate fields.

If you have selected paperless transactions, you ought to be able to access your banking statement from your internet bank account.

QuickBooks Online will automatically fill in the opening balance with the outstanding amount from the preceding month.

So it's critical to ensure that the earlier month has already been correctly reconciled — before you begin reconciling your latest bank statements. After you have entered the details from your statement, click Start reconciling.

Step 4: Match the transactions and clear them

Now comes the fun part. Go through your bank statement's list of transactions one by one as they show up on your monitor.

Verify the circle at the line's end to see if the specifics correspond. The said transaction would be labeled as "Cleared," and the resolved sum will be deducted from the discrepancy seen at the top of the page.

Tip: Use filters to make it easier to find transactions.

You can narrow down the transactions list to find them more quickly by:

  • Payments

  • Deposits

  • Status: all clear ("C")

  • Type of transaction

  • Payee

  • Date

You can make your search more specific by entering a reference number, sum, higher than, lower than, or memo in the Find field.

Step 5: Keep removing transactions until the "Difference" field is empty

Go through all transactions again and again until each one is marked off. At this juncture, there should be no difference shown.

If the disparity isn't zero, you will have to figure out why. In certain cases, the transfers on your statement might not have been put into QuickBooks Online.

If something is wrong, you'll have to save your task and add the absent transactions before you can move on with the reconciliation process.

In other instances, you might have unchecked a transaction that was already reconciled by mistake. If the data from the bank statement was entered wrong, you can tap on the Edit Info icon and move the date and/or sums that are wrong.

Save and finish

Your entries should be in the right order, and you'll see the "Success!" text. You can now click "Finish."

If the discrepancy is not zero or you do not have any way to clean all the listed transactions at one go, you could save your tasks and return to it later.

To save, click Save for later and choose "Save for later" in the drop-down menu.

Step 6: Print

When all of the transactions have been cleared, the disparity is zero, and you see the "Success!" text, you can tap on View report to see and take a printout of the reconciliation report.

You can click Done when you want to run the results later. Remember that if you press on History by Account, you can see and take printout reports from months past.

Step 7: Repeat

When you're done with the bank reconciliation with one account, keep in mind that you'll need to do it for all business accounts, such as your checking account, expense account, and any other accounts which are connected to the QuickBooks Online account.

A few businesses may even get money from interest and other sources, which they need to add up. Choose a tax expert who can tell you about all the different kinds of income and expenses you need to match up.

Common errors and solutions

If you're trying to balance your account for the very first time and also the balance at the start is wrong, don't stress.

Most problems with the opening balance are induced by a wrong beginning balance. That's the launching point for the account that you chose when you initially set things up in QuickBooks.

If you resolve your opening balance, then it should address the issues with the opening balance. Here are some things to look over before you start balancing your account for the first time.

Tip: Don't perform the below steps if you've already reconciled the account.

  1. You’ve entered a transaction, prior to the opening balance date

Verify the beginning balance of the account you're trying to balance again. Once you open the account, sometimes an opening balance would not include transfers that weren't finished yet.

If you had recently entered a previous transaction, which was dated prior to the opening balance, this is how you can fix it:

  • Go to Accounting or Bookkeeping, then choose Chart of accounts.

  • Use the roster to locate the account.

  • Choose View register.

  • Look for the first entrant inside the opening balance. Inside the Account section, this must say "Opening Balance Equity."

  • Evaluate

  • Make a note of the date as well as the amount.

Did you forget to put in a starting balance? It's fine. You can insert them when you're ready. You can also enter a starting balance by hand so that your accounts remain in balance.

  1. Your banking statements don't match the starting balance in QuickBooks

Now you understand when the starting balance in QuickBooks was made and how much it was. Compare it to your banking records:

  • Sign in to the website of your bank or look for your banking statement.

  • In QuickBooks, look at the balance of the account on the same date and as the beginning balance.

  • Make a comparison of both balances.

  • If both the balances are the same, you put in the appropriate opening balance.

If your banking statements don't match the starting balance in QuickBooks, fix it:

  • To make the view bigger in QuickBooks, click on the opening balance entry.

  • Change the amount in the Deposit section so that it corresponds to what your bank says.

  • Edit.

  • Choose Save.

Conclusion

As a painting business owner, consider outsourcing reconciliation. The less time you spend on bookkeeping, the more time you have to focus on what you do best – getting more customers, managing crews, and leading your company.

We hope the above guide has given you a detailed overview of how to reconcile accounts in Quickbooks. If you have any queries, leave your questions in the comments section below.