A Monthly Bank Reconciliation Routine for San Diego Small Businesses

Why reconcile each month?

A bank reconciliation compares your bookkeeping entries with a bank statement for the same period. The goal is not simply to make the balances agree. It is to understand whether each difference has a reasonable explanation supported by records.

For a small business, completing this routine monthly can make unusual items easier to identify while the related activity is still familiar. It also creates a consistent record of what was reviewed. Reconcile each business bank account and each business credit-card account separately. Do not combine accounts just because they are used by the same business.

Prepare before reviewing entries

Gather the statement for the period and the supporting records related to payments, deposits, transfers, and fees. Then:

• Confirm the statement’s beginning and ending dates.
• Note the statement’s opening balance and closing balance.
• Select the bookkeeping entries that relate to that same period.
• Keep supporting records available so you can verify an item before changing it.
• Start an unresolved-items list for differences that need additional review.

The statement dates matter. Comparing entries from one period with a statement from another can create differences that are difficult to interpret.

Follow a consistent review sequence

1. Compare the opening balance

Begin with the statement’s opening balance. Compare it with the balance carried into the bookkeeping period. If the starting amounts do not align, pause and investigate before reviewing the month’s activity. A difference at the beginning can affect every later comparison.

2. Review deposits and payments

Compare the statement’s activity with the bookkeeping entries for the same period. Review deposits, payments, transfers, and other recorded activity one item at a time.

Do not treat similar amounts alone as proof that two entries match. Check the date, description, account, and supporting records. Two transactions can have similar amounts without being the same transaction. Likewise, one transaction may be recorded differently in the bookkeeping records and on the statement.

3. Check the ending balance

After reviewing the activity, compare the calculated bookkeeping balance with the statement’s closing balance. If they differ, use the difference as a starting point for investigation rather than changing an entry immediately.

Common reasons for differences

A difference may reflect timing. For example, a payment may be recorded in the bookkeeping before it appears on the statement, or a deposit may be recorded before the bank processes it. These outstanding payments or deposits should be documented and monitored rather than entered a second time.

Other differences may result from:

• A missing bookkeeping entry.
• A duplicate entry.
• A legitimate fee that has not yet been recorded.
• An entry assigned to the wrong business account.
• A beginning balance that does not agree with the statement.

Verify each possibility with supporting records. Do not invent a transaction to explain a difference, and do not force the balance to agree by making an unsupported adjustment. If the reason is not clear, place the item on the unresolved-items list.

Use bank-feed suggestions carefully

Bank-feed suggestions can help identify activity for review, but checking or accepting suggestions does not replace statement reconciliation. The statement remains the reference for comparing the account’s activity, dates, opening balance, and closing balance for the period.

Review suggested entries against supporting records before accepting or changing them. A suggestion that looks familiar may still be a duplicate, a different transaction, or an item belonging to another account.

Finish and preserve your work

When the account is reconciled, review the unresolved-items list. For each item, record what is different, what was checked, and what remains unknown. Keep the statement and supporting records together with the reconciliation work so the review can be understood later.

If an entry remains uncertain, ask a bookkeeper about it instead of guessing. A clear question can include the account, statement period, amount, description, and supporting records already reviewed.

For your next bookkeeping session, choose one business bank or credit-card account, gather its statement, confirm the dates and opening and closing balances, and create an unresolved-items list before reviewing any entries.