Reconciling all of your accounts might be the single most important part of your bookkeeping process. That is why it is amazing how many businesses fail to complete their account reconciliations on a regular basis. Our video demonstration on QuickBooks reconciliation will not only explain why you absolutely must reconcile, but how to actually perform your reconciliations.
Why is reconciling your QuickBooks accounts so important?
In short reconciling is so important because it is the only way to be certain you are looking at accurate financial reports. Reconciling all of your accounts proves to you that at least all of your financial activity is recorded. Whether it is recorded properly or not is another story. That is where a good bookkeeper and CPA come into play; making sure that everything is recorded and the financial information is recorded correctly.
What accounts can be reconciled and how to reconcile them
It is important to know that many accounts can be reconciled in QuickBooks, not just bank accounts. On a regular basis you should reconcile not only your bank accounts, but also your credit cards, loans and lines of credit. Basically any account that you get a statement showing a beginning and ending balance can and should be reconciled.
Reconciling any account in QuickBooks is pretty easy in theory. Obviously the difficulty varies with volume, how complicated your transactions are and your ability to actually get all of the information necessary to reconcile into your QuickBooks file. There is no shortcut, you simply have to go transaction by transaction from your bank statement, verify it is recorded in QuickBooks and mark it as cleared. You have to reconcile to the penny; period! A few tips that will help you reconcile each month: always print checks from QuickBooks and develop a system for both AR and AP to match what goes on in your bank account. Believe me that can be easier said than done.
Using the ask my accountant account for questionable transactions
The ask my accountant account in QuickBooks can be a huge ally in helping you reconcile. More often than not when I finally identify the reason why a set of books was not reconciled it was because the person performing the reconciliation did not know how to properly record or code a transaction that hit their checking account. Any questionable transactions should be coded to 'Ask my accountant.' That way you can reconcile and you also are keeping all of your questions in the same spot. By putting all of your questions in the same account it will make it very easy to get those transactions recorded properly with your CPA or bookkeeper because they are all organized in the same spot.
Do you always reconcile your accounts?
Do you ever have trouble reconciling your QuickBooks accounts?