How to Reconcile a Bank Account: Step-by-Step for Small Businesses

Linked-do-Books · October 20, 2026

Reconciling means proving that your books and your bank agree, down to the cent. It's the monthly habit that catches missed transactions, duplicates, typos and bank fees nobody recorded.

What you need

The bank statement for the month, with opening and closing balances
Your books for the same account and month (software, ledger or spreadsheet)
Last month's reconciliation, so you know what was still outstanding

Step 1: Check the opening balance

Your books' opening balance should equal last month's reconciled ending balance. If it doesn't, something from a prior month was changed. Fix that first.

Step 2: Match every transaction

Go down the statement line by line. Match each deposit and withdrawal to your books by amount, date and description, and tick both.

Step 3: Record what's on the statement but not in your books

These are usually bank fees, interest, automatic payments (loans, subscriptions), bounced customer checks and deposits you never entered. They're real transactions, so add them to your books.

Step 4: List timing differences

These are items in your books that the bank hasn't processed yet: outstanding checks and deposits in transit. Don't change anything. Carry them forward until they clear.

Step 5: Do the math

Adjusted bank balance = statement ending balance + deposits in transit − outstanding checks
Adjusted book balance = book balance + missing deposits and interest − missing fees and debits ± error corrections

When the two match, you're reconciled. Save the report.

When it won't balance

Recheck the opening balance.
Search for a transaction equal to the exact difference.
Halve the difference. A deposit may have been entered as a withdrawal.
If the difference divides evenly by 9, look for transposed digits ($54 entered as $45).
Look for duplicates from bank imports plus manual entries.
Check transactions dated on the first and last days of the month.

How often should you reconcile?

Monthly, for every bank and credit card account. Busy accounts, like e-commerce payouts, may need it weekly. See reconciling Stripe, PayPal and Shopify payouts.

When to hand it off

If you're several months behind or the difference won't go away, it may be faster to have it done. Linked-do-Books is a 100% remote, nationwide bookkeeping service. It's technology-assisted with human review, and you get a plain-language monthly note.

Monthly bookkeeping: $199 (Lite), $249 (Starter), $399 (Growth) or $649 (Full-Service) per month. Prepay a year and save 15%. See pricing.
Behind? Books Clean-Up is $150 per month behind, with a $600 minimum and a $1,800 cap.

Bookkeeping only. Tax questions go to your licensed tax professional (bookkeeping vs. tax prep).

Frequently asked questions

What does it mean to reconcile a bank account?

It means checking that the balance and transactions in your books match your bank statement, then recording anything missing so both agree.

How often should a small business reconcile its bank accounts?

At least monthly for every bank and credit card account. High-volume accounts can be reconciled weekly.

Why won't my bank reconciliation balance?

Common causes are a changed prior month, a missing or duplicated transaction, a deposit entered as a withdrawal, or transposed digits. Check the opening balance first, then look for a transaction equal to the difference.

Do outstanding checks need a journal entry?

No. Outstanding checks and deposits in transit are timing differences. List them on the reconciliation and carry them forward until they clear.

Can Linked-do-Books reconcile my accounts?

Yes. Reconciliation is part of monthly bookkeeping, which starts at $199 per month. If you're behind, Books Clean-Up is $150 per month behind, with a $600 minimum and a $1,800 cap.