How to Fix QuickBooks Reconciliation

Nothing stops your workflow faster than a bank reconciliation that's off by a few dollars and cents. You've checked off every transaction, but the difference stubbornly remains at the bottom of the screen. Before you consider writing off the difference, know that most reconciliation problems can be solved with a methodical approach. This guide will walk you through a step-by-step process to find and fix reconciliation discrepancies in QuickBooks.

First, Understand Why Reconciliations Go Wrong

Before you start the search, it helps to know what you’re looking for. Nearly every reconciliation error falls into one of a few common categories. When you see a difference, it's almost certainly because of one of these issues:

• Incorrect Opening Balance: The opening balance in your QuickBooks reconciliation screen must match the ending balance from your last successful reconciliation. If someone edited or deleted a previously cleared transaction, this number will be thrown off.
• A Missing Transaction: Small transactions like bank service fees, interest earned, or an automatic monthly debit are easy to overlook. They appear on the bank statement but were never entered into QuickBooks.
• A Duplicate Transaction: This happens when a single payment or deposit is accidentally entered into QuickBooks twice. You'll check off one, but the duplicate will remain, throwing off your totals.
• A Simple Typo: Entering an incorrect amount is the most frequent cause of reconciliation headaches. Transposing numbers is a classic example—typing $86.25 instead of $68.25.
• Incorrect Transaction Dates: A check that was written in January but didn't clear the bank until February is perfectly normal. However, if you enter a payment with a February date in QuickBooks when the bank processed it in January, it can cause a mismatch for your January reconciliation.

The Initial Checks: Find Low-Hanging Fruit

Always start with the simplest potential problems. Don't waste time comparing individual transactions until you've confirmed that the basic information is correct. This only takes a minute and can often solve the problem immediately.

1. Confirm Your Statement Details

Look at the reconciliation startup screen in QuickBooks. Double-check that two fields match your paper or digital bank statement exactly:

• Ending Balance: Is the ending balance you entered identical to the ending balance on your bank statement? A single typo here is a common source of error.
• Ending Date: Did you enter the correct closing date for the statement period? An incorrect date can cause QuickBooks to include or exclude transactions that fall outside the statement period.

If you've already started the reconciliation, you can still edit this information. Look for an "Edit Info" button at the top of the reconciliation screen.

2. Verify the Opening Balance

Your opening balance in QuickBooks must be the same as the ending balance from the prior month's statement. For example, your February reconciliation opening balance should match January's closing balance.

What if it doesn't? This means a transaction from a previously reconciled period has been changed. To find it, run QuickBooks' Discrepancy Report. Here's how:

1. From the Reconciliation screen, click the "We can help you fix it" link underneath the beginning balance details.
2. This will open the Reconciliation Discrepancy Report.
3. Review the report. It will list any reconciled transactions that have been modified, unreconciled, or deleted. This report will point you directly to the source of the problem. You can then correct the transaction and your beginning balance will update.

Methodical Search: A Step-by-Step Process to Find Discrepancies

If the preliminary checks don't solve the mystery, it’s time to move on to a disciplined line-by-line review. The key is to be systematic instead of randomly scanning for errors.

Step 1: Focus on One Side at a Time

Don't try to compare all payments and deposits at once. It's much more efficient to verify all deposits first, then verify all payments second. Break the problem into smaller, manageable chunks.

Step 2: Compare Deposits and Credits

Start with the easier side: the deposits. You will generally have far fewer deposits than payments, so it’s quicker to audit a smaller list of transactions.

1. On your bank statement, go to the first deposit listed. Note the date and the exact amount.
2. In the QuickBooks reconciliation window, look for that same amount on the same date. Click the checkbox next to it when you find a match.
3. Continue this process for every single deposit on the statement.

A common occurrence for businesses: Bundled Deposits. Sometimes QuickBooks will show three individual payments from customers, but your bank statement shows one single deposit for the total amount (e.g., you deposited three checks at once). If you can't find a matching deposit, look for a group of transactions in QuickBooks that add up to the total deposit on your bank statement.

Step 3: Compare Checks and Debits

Once you’ve verified every deposit, repeat the exact same process for all payments, withdrawals, and debits. This side takes more time simply due to the volume of transactions.

1. On your bank statement, find the first withdrawal or payment. Note the date, amount, and check number (if applicable).
2. In the QuickBooks reconciliation screen, find the matching transaction. Use the search or sorting features to find it quickly. Check it off.
3. Carefully move down your bank statement, line by line, checking off each corresponding entry in QuickBooks.

Classic "Accountant Tricks" for Finding the Difference

If you've completed a line-by-line check and still can't find the issue, you can use the value of the difference itself as a clue. Accountants have used these simple math tricks for decades to quickly pinpoint certain types of errors.

• Look for the Exact Amount: Is a transaction for the exact amount of the difference missing? For example, if you're off by $15.00, scan your bank statement for a $15.00 bank fee you might have forgotten to enter.
• Look for Half the Amount: If the difference is, say, $200, look for a transaction of $100. Sometimes a debit of $100 is mistakenly entered in QuickBooks as a credit. The result is a $200 discrepancy ($100 that wasn't subtracted, and $100 that was incorrectly added).
• Check for a Transposition Error: This is a very common mistake. A transposition is when you reverse the order of two digits (e.g., typing 45 instead of 54). An easy way to check for this is to see if your difference is divisible by 9. For example, if your books are off by $9 (54 - 45 = 9), it's highly likely a transposed number is the culprit. Divide your difference by 9. If you get a whole number, scan your transactions for amounts containing those digits.

Making the Fix: How to Correct Reconciliation Errors

Once you’ve identified the error, correcting it is usually straightforward. Here’s how to handle the most common fixes directly from the reconciliation screen.

Editing an Existing Transaction

If you find that a transaction has the wrong amount, date, or payee, you don't need to leave the reconciliation window.

1. In the reconciliation transaction list, click on the transaction you need to fix.
2. An "Edit" button will appear. Click it.
3. QuickBooks will open the original transaction form (check, expense, deposit, etc.).
4. Make the necessary changes to the amount, date, or other details and click "Save and Close."
5. QuickBooks will return you to your reconciliation, and the correction will be reflected instantly.

Adding a Missing Transaction

Suppose you found a bank service charge on your statement that was never entered into QuickBooks. You can add it on the fly.

1. Navigate to the standard screen for the transaction type (e.g., Banking > New Expense).
2. Enter all the relevant information for the bank fee or other missing item: payee, date, amount, and the category (e.g., "Bank Service Charges").
3. Save the transaction.
4. Return to your reconciliation screen. The newly added transaction should now appear in the list, ready for you to check off.

Deleting a Duplicate Transaction

To delete a duplicate, you follow the same steps as editing. Click the transaction in the reconciliation list, then click "Edit." In the transaction window that opens, you'll see a "Delete" option at the bottom. Use this with caution, and be absolutely certain the entry is a true duplicate before deleting.

Final Thoughts

Reconciling your bank accounts in QuickBooks doesn't have to be a painful process. Fixing an out-of-balance reconciliation is about being methodical. By taking the time to verify your starting information and systematically ticking off transactions one by one, you can confidently find and resolve any discrepancy.

Keeping your books balanced is the cornerstone of financial clarity and tax preparation. Accurate records allow you to ask deeper strategic questions about your business, like researching tax implications for a new state or modeling an S-Corp election. When those complex questions come up, our AI tax research assistant, Feather AI, provides citation-backed answers in seconds, saving you and your professionals from hours of manual research.