How to Reconcile Your Accounts in 8 Easy Steps

Tulsa Outsource Accounting

If you run or operate a small business, it is your sole responsibility to maintain the financial health of your company. To do so effectively, certain bookkeeping and accounting activities must be performed – especially at the end of the month.

From employee payroll to budgets and expenses – your dollars in spending must match what is recorded in your books. As a business owner, your day is often filled with customers, orders, sales, and services needing your attention. Oftentimes, business owners leave the books for “when they have time” or delegate the task to someone they trust – usually a family member or dear friend.

While this may work for you, you must be aware that errors do happen. When these errors occur, they leave behind a tricky web of columns, debits, and credits to unravel. The last thing you need is to hire an accountant or CPA firm to “fix your books” and absorb the high dollar per hour cost. So, how do you avoid this from happening?

Reconciling Your Accounts to Avoid Errors

Every business must document or verify account balances, this process is referred to as reconcile accounting. Reconcile accounting is figuring out how much money is sitting in your account. Sounds easy, right? However, to accomplish this, you must keep track of records of every transaction that transpires. 

Depending on whether you run a cash-based business or if you run an accounts receivable business, you are going to need some sort of documentation system. You will need an invoicing system that matches with contracts or service agreements to reconcile and total your balances each month. Missing a step can alter the growth of your business for many different reasons.


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The Magic of Reconciling Accounts At Month End In 8 Steps

Reconcile accounting is actually quite simple! We have shared eight simple steps that you can follow to assure you or your in-house bookkeeper is getting the job done correctly. This is the same strategy that we implement for our clients when we manage their books.

Step 1

Obtain a copy of the statement for the account you want to reconcile. Often this is a bank or credit card statement that you get in the mail. If you have opted for a “paperless” statement, your bookkeepers should have the log-in information to retrieve that for you. 

Step 2

Find last month’s ending balance. This is usually the starter balance on your statement and appears in most accounting software at the beginning of your statement.

Step 3

Enter the ending balance for the month.

Step 4

Open your reconciliation program. QuickBooks usually has a feature like this if you use their desktop or cloud accounting software. Mark all entries such as deposits, checks, etc. as “entered” in the program if they already appear there.

Step 5

If you see transactions on your statement that are not listed in your reconciliation program, you can enter them manually at this time.

Step 6

Look for any transactions in your accounting software that are not on your statement yet – things such as uncleared checks or outstanding deposits. These need to be legitimate entries and can be adjusted or removed if needed.

Step 7

It’s time to get to zero in your balance! Make sure your reconciled difference is equal to $0 in your accounting software. If not, you might have missing transactions or made errors in your entries. Don’t worry, just review your entries again to find the discrepancies.

Step 8

Once you have “zeroed” out your account, click “reconcile” in your accounting software. Print the reconciliation report and file it along with your bank statement!

Reasons to Reconcile Your Accounts at Month End

Reconciling your account is your testimony that these transactions are valid and belong in that account and not in some other account. This is also a good practice to get to know the inner workings of what goes in and out of your business. 

More importantly, you are testifying that you are running an honest and legitimate business, something that will keep you from any legal trouble. Taking control of your finances is a crucial part of making good business decisions. Using outsourcing bookkeeping services such as LUXA is a sound move to improve the financial outlook of any business.

With TEAM LUXA reconciling your accounts, you can be assured that an experienced bookkeeper is handling your books. This can improve your odds of profitability. Additionally, we design a customized program using your debits and credits to provide a viable solution to ensure accuracy.

No matter what type of business you have, LUXA  is ready to partner with you as your outsource bookkeeper for your reconciling needs.

LUXA Enterprises specializes in HR services, outsource accounting, bookkeeping, and payroll services. We match up with ideal candidates for services by allowing small to midsize businesses to increase focus on their growth through outsourcing. If you want to know how we can help you, contact us today!


We’ll demonstrate how you can save money while improving your efficiency and accuracy when you outsource your back office services to TEAM LUXA.
Let Us Present A Plan →
LUXA Enterprises download brochure

Call TEAM LUXA today at (918) 928-7288 to learn more about why outsourcing is right for you!

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