Bookkeeping · 6 min read
How to Reconcile Bank Accounts
Reconciliation is the single most important monthly habit in bookkeeping. It's how you prove the books match reality — and it's the first thing a CPA checks.
What reconciliation actually proves
A reconciliation confirms that every transaction the bank recorded is in your books, and every transaction in your books actually cleared the bank. If they don't tie, the financials are wrong — full stop.
The monthly workflow
- Download the bank statement for the period (calendar month)
- Open the matching account in your bookkeeping software
- Enter the ending statement date and ending balance
- Check off each transaction that appears on both sides
- Confirm the difference is $0 before closing
Common reasons it doesn't reconcile
- Transactions entered twice (duplicates)
- A deposit or payment missing from the books
- Wrong amount entered (transposed digits)
- Wrong date — transaction is in a different period
- Manual journal entry posted to the bank account by mistake
- Prior month was force-balanced — the error rolls forward
