How to Reconcile a Business Bank Account Each Month

Reconciling a bank account means checking that your records and the bank’s agree. Once a month, you compare every transaction in your books with the bank statement, explain any differences, and confirm that both arrive at the same balance. It’s the step that catches a missed deposit, a duplicated expense or a fee you didn’t know about, while it’s still easy to fix.

This guide gives a step-by-step routine, a worked example, the most common reasons the numbers don’t match, and why it helps to lock a month once it’s done.

Why reconcile at all

Your books are only useful if they’re right. Reconciling each month:

Catches errors early: a transaction entered twice, a typo in an amount, a payment recorded in the wrong account.
Finds missing items: bank fees, interest, automatic payments you forgot to record.
Spots fraud or mistakes by others: a charge you didn’t make, or a deposit that never arrived.
Makes year end easy: twelve reconciled months add up to a clean year, with no surprises for your tax preparer.

Every bank and card account the business uses should be reconciled, including the business credit card and any savings account.

What you need

The bank statement for the month, with its starting and ending balances.
Your books for the same account and period.
Last month’s reconciliation, so you know which items were still outstanding.

Step by step

Start from the statement’s beginning balance. It should match the ending balance of last month’s reconciliation. If it doesn’t, an already reconciled month has changed, and that needs fixing first.
Match deposits. Tick off each deposit on the statement against an income or transfer entry in your books. Watch for one bank deposit covering several customer payments.
Match withdrawals. Tick off each check, card charge, transfer and payment.
Add what’s on the statement but not in your books. Bank fees, interest earned, automatic payments. Record them now.
List what’s in your books but not on the statement. Typically checks that haven’t cleared and deposits made on the last day of the month. These are outstanding items.
Compare balances. The statement’s ending balance, plus deposits in transit, minus outstanding checks, should equal your books’ balance.
Investigate any difference. Don’t force it with an adjustment until you know the cause.
Mark the month reconciled and save a note or report of the outstanding items.

A worked example

A small landscaping business reconciles its checking account for the month.

The bank statement shows:

Beginning balance: $8,200.00
Ending balance: $11,415.00

The books show an ending balance of $10,920.00.

Going through the statement:

Every deposit and payment matches except three items.
The statement shows a $15.00 monthly service fee that isn’t in the books.
The statement shows $2.40 of interest that isn’t in the books.
The books show a $1,200.00 check to a supplier, written on the 29th, that hasn’t cleared.
The books show a $1,712.60 customer deposit made on the last day of the month, not yet on the statement.

First, record the fee and the interest. The books’ balance becomes $10,920.00 − $15.00 + $2.40 = $10,907.40.

Then adjust the bank’s balance for outstanding items: $11,415.00 + $1,712.60 (deposit in transit) − $1,200.00 (outstanding check) = $11,927.60.

That doesn’t match $10,907.40. The difference is $1,020.20. Searching for that amount turns up the cause: a $1,020.20 customer payment that arrived by transfer and appears on the statement, but was never entered in the books. Recording it brings the books to $11,927.60. Balanced.

Common reasons it doesn’t match

Missing entries: fees, interest, automatic payments, transfers.
Duplicates: a transaction entered by hand and also imported from the bank.
Transposed digits: $1,540 entered as $1,450. A difference divisible by 9 is a classic sign.
Wrong account: a business card payment recorded against checking, or the other way around.
Timing: checks and deposits that cross the month end.
A changed earlier month: someone edited a transaction in a month that was already reconciled, so the starting balance no longer agrees.
Bank errors: rare, but they happen. Call the bank with the details.

A useful trick: if the difference is exactly twice an amount you see, a transaction was probably recorded with the wrong sign, as a deposit instead of a payment.

Lock reconciled months

Once a month is reconciled, it should stay that way. If a transaction in a reconciled month is edited or deleted later, next month’s starting balance stops matching and the problem resurfaces, often long after anyone remembers why.

Many bookkeeping tools let you lock reconciled transactions or close a period so they can’t be changed without a deliberate step. If yours doesn’t, keep a copy of each completed reconciliation (the statement balance, the outstanding items and the date you finished) so you can spot when something has moved.

If you do need to change a reconciled month, unlock it on purpose, make the correction, note why, and reconcile it again.

Make it a habit

Pick a fixed day, such as the fifth of each month, a few days after statements arrive.
Do card accounts too; they hide more surprise charges than checking.
Import from the bank rather than retyping, and watch for duplicates when you also enter things by hand.
Clear old outstanding items. A check that hasn’t cleared in several months deserves a call to the payee.
Keep the statements and reconciliations with the rest of your records. The IRS generally expects records to be kept for 3 years, and longer in some cases (how long to keep records), so twelve reconciled months for tax year 2026 are worth saving.

How Kemback fits

On the personal side, Kemback already reconciles accounts against a statement, and reconciled transactions are locked until you deliberately unlock them. Imports of OFX, QFX, QIF and CSV files are idempotent, so the same transaction is never added twice, and Kemback Plus adds bank sync through Plaid (Plus pricing). Small Business, part of Kemback Business, includes bank sync for the business and brings the same reconciliation to each company account, with a reconciliation report and reconciled rows locked. Rental Houses matches recorded rent to the deposit in your own bank account (rental property tracking). See pricing for both add-ons.

This post is general information, not tax advice. Check with a qualified tax professional for your situation.

#reconciliation #bookkeeping basics #month-end close

This article is general information, not financial, tax or legal advice. For decisions about your situation, talk to a qualified professional.