Bank Reconciliation for Beginners: Making Sure Your Books Match Your Bank
If you’re a small business owner managing your own books, you’ve probably heard the term “bank reconciliation” — but what does it actually mean, and how do you do it?
In simple terms, reconciling your bank account means comparing your bookkeeping records (what’s in your accounting software or spreadsheet) with your actual bank statement — to make sure everything matches. It’s like balancing your checkbook, but for your business. This step is key to catching errors, spotting missing transactions, and making sure your numbers are accurate.
Here’s how to do it, step by step:
Step-by-Step: How to Reconcile Your Bank Account
1. Gather Your Documents
Log in to your accounting software (like QuickBooks, Xero, or Wave), or open your bookkeeping spreadsheet.
Download your bank statement for the period you’re reconciling (monthly is standard).
2. Match Beginning Balances
Make sure the starting balance in your books matches the opening balance on your bank statement. If it doesn’t, check if the prior month was reconciled properly.
3. Go Line-by-Line
For each transaction on your bank statement, find the matching entry in your books.
Mark it off as “cleared” or “reconciled” in your software or spreadsheet.
Pay attention to dates, amounts, and descriptions.
4. Add Missing Transactions
If something is on your bank statement but not in your books (e.g. bank fees, transfers, deposits), you’ll need to manually enter it.
5. Remove Duplicates or Errors
If you’ve accidentally recorded the same payment twice, or made a typo, now’s the time to fix it.
Also check for reversed or bounced payments.
6. Compare the Ending Balance
After all adjustments, your ending balance in your books should match your bank statement’s closing balance.
7. Save Your Work
Save or export the reconciliation report for your records. CRA recommends keeping records for at least 6 years.
Tips for Staying on Track
Reconcile monthly — don’t wait until year-end (or tax time).
Use bank rules in your software to speed up matching.
Always review both bank accounts and credit cards.
If things don’t balance, start small — check one week at a time.
Reconciling might sound intimidating at first, but once you’ve done it a couple of times, it becomes part of your regular business rhythm. Staying on top of your books means fewer surprises at tax time, clearer insight into your finances, and the confidence to make smarter decisions as your business grows. You're not just keeping things organized — you're taking control of your financial future.