How to Reconcile Bank and Credit‑Card Accounts in QuickBooks Online

Why Reconcile in QuickBooks Online

Reconciliation compares your QuickBooks records to your bank or card statement for a given period. When done properly, the difference is zero, meaning everything on the statement is reflected in QuickBooks and vice‑versa. Benefits include:

• Accurate financials: Detect data‑entry mistakes (duplicate transactions, wrong amounts, wrong dates) early.
• Cash‑flow control: Confirm what actually cleared the bank so your balances are reliable.
• Fraud detection: Spot unauthorized or unexpected charges that didn’t originate from your books.
• Audit readiness: A documented reconciliation trail (reports) supports year‑end reviews and audits.
• Tax confidence: Clean reconciliations reduce surprises at tax time and support accurate filings.

Before You Start

Step‑by‑Step: Reconcile an Account

This workflow applies to both bank and credit‑card accounts in the U.S. version of QuickBooks Online.

1) Open the Reconcile tool

1. Select ⚙️ Settings → Tools → Reconcile.
   Alternative: Left nav → Accounting → Reconcile.
2. If it’s your first time, choose Get started.

2) Choose the account

1. From Account, pick the bank or card you’re reconciling. Double‑check the last 4 digits or nickname to avoid reconciling the wrong register.
2. If QBO shows a notice about a previous reconciliation or mismatch, follow the prompts to resolve it before continuing.

3) Enter statement details

1. Type the statement Ending balance and Ending date exactly as shown on the statement.
2. Confirm the Beginning balance displayed by QBO equals your prior statement’s ending balance.
3. Optional: If the account is not connected to bank feeds, you can enter service charges and interest earned here (with proper expense/income accounts and dates).
4. Select Start reconciling.

4) Match and clear transactions

1. Compare each line on the statement to the list in QBO. When a transaction matches (date/amount), check it off to mark it cleared.
2. Use filters to narrow the list by Payments vs Deposits, date range, payee, or transaction type when volume is high.
3. Keep an eye on the Difference value at the top. Your goal is 0.00.
4. If something on the statement isn’t in QBO, add it (or locate it in another register, like a transfer). If something is in QBO but not on the statement, leave it uncleared and investigate.

5) Finish the reconciliation

1. When the Difference shows zero, choose Finish now.
2. View the Reconciliation report. Save a PDF copy and store it with your monthly close documents.
3. If you need to pause, select Save for later and return via Reconcile → Resume reconciling.

How to Find & Fix Differences

If the Difference isn’t zero, work through these checks until the variance disappears:

1. Beginning balance mismatch — If last month’s ending doesn’t equal this month’s beginning, someone may have edited, deleted, or unreconciled a prior transaction. Use History by account and reconciliation reports to spot changes. Re‑add or correct the affected entries.
2. Wrong ending balance/date — Reopen the Edit info panel and correct the statement ending balance and date.
3. Missing transactions — Enter the missing bank fees, interest, deposits, transfers, or payments. Ensure dates fall within the statement period.
4. Duplicates — Bank feed + manual entry can create duplicates. Void the extra copy (never delete prior‑period activity without understanding impact).
5. Transfers recorded one‑sided — Make sure transfers appear in both accounts (e.g., checking ➜ credit card payment). Use the Transfer form rather than separate expense/deposit when appropriate.
6. Edited amounts or dates — If a previously reconciled transaction was changed, the beginning balance breaks. Restore original values or properly adjust in the current period after consulting an accountant.

Reports & History by Account

• Reconciliation report: Lists cleared/uncleared items, beginning/ending balances, and the difference. Save a PDF each month.
• History by account: Shows each completed reconciliation and any changes detected by QBO after the fact.
• Audit trail (Activity log): Use when you suspect edits to reconciled transactions.

To recheck an old period, open ⚙️ Settings → Reconcile → History by account, filter by account and date, and open the report you need.

Real‑World Scenarios

1) U.S. small business owner reconciling monthly bank activity

Maria runs a retail boutique. Each month she downloads her bank statement, confirms bank feeds are categorized, and starts reconciliation. She finds two card deposits in the statement that weren’t in QBO because the merchant fees were netted. She records a single deposit for the gross sales and a separate expense for processing fees. The difference becomes zero and the month closes cleanly.

2) Travel agency with recurring invoices

A tour company issues recurring invoices for packages. During reconciliation, the owner notices deposits that combine multiple customer payments. They use the Undeposited Funds workflow to group payments into a single bank deposit that matches the statement. This keeps A/R clean and simplifies reconciliation.

3) Wellness clinic categorizing expenses

A clinic with multiple expense categories sees many small card charges. The bookkeeper sets up bank rules for commonly recurring vendors (e.g., medical supplies, software subscriptions) so most transactions auto‑categorize. At month‑end, the reconcile screen is mostly point‑and‑click, and reports are complete.

Common Mistakes to Avoid

• Reconciling the wrong account or period. Double‑check account name and statement dates before you start.
• Forcing a month to zero with a journal entry. “Plugging” masks data issues and confuses future periods.
• Deleting prior‑period transactions. This breaks the beginning balance. If truly erroneous, reverse with a correcting entry in the current period and document why.
• Skipping bank rules or payee cleanup. Consistent vendor names and smart rules speed matching and improve reporting.
• Ignoring unmatched bank feed items. Every downloaded item must be added, matched, or excluded with a reason.
• Not documenting variances. If you need time to investigate, save for later and keep notes. Don’t guess.

Helpful Tips & Best Practices

• Close in order: Reconcile the oldest open month first; never jump ahead.
• Use Transfer for payments between accounts: It creates both sides of the movement automatically.
• Group customer payments via Undeposited Funds: Make deposits in QBO that mirror how your bank batches funds.
• Lock the books monthly: After reconciling, set a closing date with a password to prevent accidental changes.
• Keep artifacts together: Save the reconciliation report PDF with the bank statement and any notes in a month‑end folder.
• Review clearing times: Checks and certain ACH items may clear next month. Don’t clear them until they appear on the statement.

Legal & Compliance Considerations

• Audit trail integrity: Keep unaltered copies of statements and reconciliation reports for your records retention policy (commonly 7 years for tax support—confirm with your CPA).
• Segregation of duties: Where possible, separate who records transactions from who reviews bank statements and performs reconciliations.
• Cardholder data: Do not store full card numbers in QBO memos or attachments. Keep PCI hygiene in mind for any supporting documents.
• Adjusting entries: If you need corrective journal entries, attach documentation and include clear memos for audit clarity.

FAQ: Quick Answers

How do I undo a reconciliation?

Open the account register, locate the transaction, and click the reconcile status until it’s blank (from “R” to cleared “C” to blank). For undoing an entire period, consult your accountant to avoid breaking the beginning balance across months.

What if my bank shows a combined deposit but QBO shows individual payments?

Use the Receive payment or sales receipt workflow to collect funds, then group them in a single bank deposit using Undeposited Funds to match the bank batch.

Should I reconcile savings, loans, and petty cash too?

Yes. Any balance‑sheet account that has an external statement or schedule should be reconciled: checking, savings, credit cards, lines of credit, merchant clearing, and loan principal.

Can I reconcile if I haven’t finished categorizing bank feed items?

It’s best to categorize first. Otherwise you’ll be adding and editing during reconcile, which increases the chance of errors and slows you down.

What report proves I reconciled?

The Reconciliation report for each period. Save it along with the statement in your month‑end folder.