What Is Reconciliation?
Reconciliation of accounts in basic terms can be defined as an accounting process. The quickbooks online help in the preparation of bank reconciliation statements. That will make sure that the money leaving or entering an account matches the actual money spent or earned at the end of the fiscal period. It is a very important activity for a business as it gives an opportunity to check for any fraudulent activity. To avoid any errors in the financial statement. It is usually done at regular intervals be it monthly or quarterly, as a part of normal accounting procedures.
By the end of any fiscal month or quarter, it is an important practice to reconcile your accounts. As it helps the business to verify that every transaction sum to the correct ending account balance. Two fundamental ways to reconcile your accounts is by reviewing the documents and analytics. In the process of documentation review, it compares the amount of every transaction with the amount shown in the incoming or outgoing for the corresponding account.
A basic rule of good bookkeeping is a regular bank account reconciliation. It is a process in which the business matchup their transactions in QuickBooks Online. With the bank statement and credit card statements which is a very important and helpful process to guarantee that the bank accounts matchup. With accounting statement along with the information that there is no risk of overspending based on what’s actually in the bank.
Below are a few key terms, one has to be familiar with before reconciliation of their bank accounts:
Beginning balance — the amount of funds at the opening of a new month or financial period
Beginning date — the date when a new financial period
Ending balance — the amount of at the end of a month or financial period
Ending date — the last date of the previous financial period
To reconcile your accounts with QuickBooks there are few simple steps that you can follow:
- You will require some important information that’s found on your bank statement, so make sure you have it with you, for the account you’re reconciling.
- Go to your navigation bar and select the Accounting tab. Then select one of your accounts to review before moving onto the others.
- You will be prompted to enter the ending balance and date in the boxes that appear. You can find these on your bank statements, and you will want to enter them as they appear.
- Review each line of the account and make sure individual amounts and the aggregate totals matches your bank account statement.
- If everything is correct and matches up, you should see a 0-difference reported by your QBO account.
- Rinse and repeat for the rest of your connected accounts.
Next question what comes to the mind is , What to be done if the accounts don’t match with what’s in QBO?
On the off chance that after you’ve finished reconciliation of your accounts but despite everything you don’t have a $0 balance, don’t panic. Basic reasons for this are bank administration charges, watches that haven’t cleared your bank yet are as of now entered in QBO, stores you’ve entered however haven’t cleared your bank yet, or exchanges that presented on the bank yet aren’t recorded in QuickBooks. These are for the most part alright. This kind off errors can be avoided by routinely accommodating your records , particularly as its difficult to review exchange subtleties . There are articles available in intuit that offers help in how to fix incorrect/ zero beginning and how to deal with reconciliation discrepancies.
What are QBO?
Quick books is a small business accounting software program which the business use to manage income and expenses and keep track of their finances. It can be used to invoice customers , pay bills , generate reports and even to prepare to pay for your taxes , it includes various solutions that would perfectly work for a solopreneur to a mid sized business . You can take a free spin at quick Books by opting for a 30 day free trial , the trial is a fully functional version of Quick Books , so you can test every thing and later pay for your needs accordingly.
Ways in which QuickBooks / Reconciliation of accounts can help a business:
1. Manage Sales & Income
You can manage sales and income in QuickBooks by creating invoices to track sales by customer. Stay on top of what customers owe you (also known as your accounts receivable balance) by reviewing your Accounts Receivable Aging Report, which includes the details of both current and past due invoices. Below is a sample Accounts Receivable (A/R) Aging Report from QuickBooks Online.
2. Keep Track of Bills & Expenses
QuickBooks automatically keeps track of your bills and expenses by connecting your bank and credit card accounts to QuickBooks so all of your expenses are downloaded and categorized. If you need to track a check or cash transaction, you can record it directly in QuickBooks in just a few minutes.
3. Gain Key Reporting Insights to Your Business
By managing all of your cash inflow and outflow activities in QuickBooks, you are able to access several reports that provide valuable insights into your business and its financial health. All of the reports are prebuilt in QuickBooks and can be run in just a few clicks; reports are updated in real-time as you enter and save transactions.
4. Run Payroll
Payroll is an area that you don’t want to skimp on by trying to do it manually. Mistakes made in calculating pay checks can result in steep penalties and unhappy employees. QuickBooks has its own payroll function that can automatically calculate and run payroll as often as you need it.
5. Track Inventory
If you need to keep track of the inventory you sell, such as on-hand amounts and unit costs, QuickBooks will automatically track and update this for you as you enter transactions. In QuickBooks, there are several reports available to manage inventory.
6. Simplify Taxes
If you have to consolidate several spreadsheets, it can take longer to get your tax professional what they need than it takes to prepare your tax return. Use QuickBooks Online to manage all of our business accounting and taxes information they need to file our tax returns. Since everything is tracked in QuickBooks, we do not spend a lot of time organizing receipts and bank statements. This not only ensures that we have accounted for all income and expenses, but also improves accuracy as a result.
7. Accept Online Payments
One of the best ways to improve your cash flow is to offer customers the option to pay their invoices online. With QuickBooks, you can add the Intuit Payments feature.
Once activated, all customer invoices you send via email will include a “Pay Now” button. Your customer can click on that button and pay their invoice using a major credit card or by entering their bank account information to authorize an automated clearing house (ACH) payment directly from their bank account.
8. Scan Receipts
Another key to making tax time a breeze is being able to organize your receipts in QuickBooks. All QuickBooks Online (QBO) subscribers can download the QuickBooks app to their mobile device for free, take a picture of a receipt, and upload it to QBO in just a few minutes.
No more lost receipts or manually matching up receipts with downloaded banking transactions. QuickBooks allows you to attach a receipt to the corresponding banking transaction. You can upload an unlimited number of receipts to QBO, which are stored in the cloud along with your data. This can be really helpful for companies that track a lot of expenses.
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