One of your payments may not have cleared yet, or maybe you paid using cash or a different account. All bank withdrawals should be recorded in your books. This includes things like bank fees, average payment period which you might not have accounted for yet.
Business books show something that’s not on your bank statement?
Each entry should match a deposit on your bank statement. A customer payment might have bounced, for example. Make sure each deposit appears as income in your accounts. You’ll need to figure out if it was a sale, interest, a refund, or something else. Switching between documents and comparing numbers isn’t everyone’s cup of tea. If you can’t spare the time or stand the monotony, there’s an alternative.
It sounds mind-numbing and it can be if you’re doing it manually with paper bank statements. But there are clever ways to lighten the load. Most banks will send your transaction data directly to online accounting software. Then you have both sets of records on the same screen and you can run through them really fast. Smart software like Xero will even suggest matches, so all you need to do is click OK. Learn about the eight core bookkeeping jobs, from data entry to reporting and tax prep.
Accounting software
You could get that from a statement, from online banking, or by having the bank send data straight to your accounting software. If you run a current account and a credit card account, you’ll need both statements. You can still manually enter things like expenses that aren’t captured by the business bank account. And you can have the software retrieve transaction data from point-of-sale and invoicing systems, or receipt scanners. No matter how you do bank reconciliation, you’ll come across mystery transactions from time to time. There will be amounts that appear in one set of records but not the other.
How to do bookkeeping
- After you’ve checked all the deposits and withdrawals, your business bank balance should match the totals in your business accounts.
- Bank reconciliation gets much trickier if you use the same account for business and personal transactions.
- Each entry should match a deposit on your bank statement.
- Make sure each deposit appears as income in your accounts.
This is why you’re doing bank rec, and there’s often a straightforward explanation. Bank reconciliation is a way to double-check your bookkeeping. You do it by the most and least expensive cars to maintain comparing your business accounts against your bank statements.
If they don’t sync up, you need to figure out why. It’s most likely because you mistyped some information into your business accounts, entered it at the wrong time, or missed a transaction altogether. Bank reconciliation gets much trickier if you use the same account for business and personal transactions. Get to the bottom of it and make the necessary notes.
Schedule the time to do it every week or even every day. And set up a system that makes it quick and easy to grab the records you need. After you’ve checked all the deposits and withdrawals, your business bank balance should match the totals in your business accounts. This will be the starting point for your next reconciliation. Each entry should match a withdrawal on your bank statement.
All you need to do bank reconciliation is a copy of your business accounts and a list of bank transactions from the same time period. The software then presents the transactions on a screen, asking you to verify them and assign each one to an account. You just have to click to confirm what’s suggested. Many people open their business ledger on one screen and a bank statement for the same period, then cross-reference. If you can’t find a match for a transaction, you need to figure out why and make adjustments so that both records mirror each other. Bank reconciliation helps you find and fix data entry mistakes or missed transactions.
Bank statement shows something that’s not in your business books?
Fill out the form to receive the guide what is the full disclosure principle in accounting as a PDF. Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You need a list of transactions from the bank.