The Importance of Reconciling Your Accounts in Quickbooks® for Financial Accuracy
- Jenny Marie
- Nov 8, 2024
- 2 min read
Updated: Apr 22
A while ago I had someone tell me they weren't worried about reconciling their accounts in Quickbooks® My eyes almost popped out of my head! I couldn't comprehend why this person would believe doing this action wasn't vital for tax reporting or managing their business!
Reconciling simply means comparing what’s on your bank statement to what’s recorded in QuickBooks® (or whatever accounting system you use). It ensures that your records are accurate and match what actually happened in your bank account.
Why This is Vital - Example 1
While cleaning up a new client’s books, we discovered something shocking—triple duplicates of deposits in their bank register which showed up when we went to reconcile. Why did this happen? Who knows? It could have been a system glitch. It could have been an error made by the previous bookkeeper. It could have been the owner. The point is, if we didn’t reconcile, we wouldn't have noticed and the reports for profit and loss would have been completely wrong.
Without reconciliation:
Their income would have appeared three times higher than reality.
They would have made financial decisions based on incorrect data.
They would have paid more in taxes on income they never actually received.
The point is, if we didn’t reconcile, we wouldn't have noticed and the reports for profit and loss would have been completely wrong.
Why This is Vital - Example 2
While reconciling a current client's bank accounts, we noticed that there was still an Amex® payment not checked off but the reconciliation was "green" (meaning we could complete the action. However, we also knew that we had already reconciled the Amex account and so that transaction couldn't be deleted it because it cleared on the Amex side! When we searched for a similiar amount in the reconciliation window - we found one. It was a duplicate. That one was not connected to the Amex account and reconciled on the Amex side so we COULD delete it. Then we selected the right one and we could complete the action.
Without reconciliation:
The Amex register and the main account register would have been off.
The Profit and Loss report would have been inaccurate.
The balance sheet would have been incorrect.
After cleaning up books for over 15+ years, we recommend hiring a professional. By professional we mean someone who has years of experience. Not someone who is extremely cheap but just started. You will regain your cost of a professional with the services they provide! Reconciliation isn’t just an extra step—it’s an essential one. Don’t let bad bookkeeping cost you thousands!
Let us know if this blog helped. If you would like a Free Consult, CONTACT US!
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