How Do I Reconcile My Business Bank Account?

By Bill Stilwell · Last reviewed October 17, 2026

The short answer

Reconciling means checking that your books match your bank statement, line by line, for the same month. Do it every month for every bank account, credit card, loan, and payment processor. When the balances match and every difference is explained, you can trust your numbers.

What this means

Your bank has its record of what happened. Your books have yours. They should agree. When they don’t, it’s usually one of these:

A transaction that hit the bank but isn’t in your books yet, like a fee or interest
A check or payment you recorded that hasn’t cleared the bank yet
A typo, a duplicate, or a transaction in the wrong account
A charge nobody approved

The Internal Revenue Service (IRS) Publication 583 tells small businesses to reconcile their business checking account each month.

Made-up example: Summit Ridge Roofing reconciles its checking account on the 5th of each month. In March, the books show $340 more than the bank. The owner finds a supply refund that was recorded twice and a monthly bank fee nobody entered. In April, she spots a $49 software charge from a service the shop canceled. She calls the vendor and disputes it.

Why it matters

Errors stack up. A small mistake left alone for a year is much harder to find.
Fraud hides in unchecked accounts. Regular review is one of the best ways to spot charges nobody approved (see 11.9.5 Payment Fraud).
Your reports depend on it. Profit and loss and balance sheet numbers are only right if the cash is right (see 10.5.8 Financial Reports).
Disputes have time limits. Banks and card companies set deadlines for reporting problems. Waiting can cost you the right to dispute. Check your account agreement for the deadlines.

Who this applies to

Every business with a bank account. Include credit cards, lines of credit, loans, payment processors, and payment apps. They all hold or move business money.

How to do it

Pick a set day each month, after statements arrive.
Finish recording the month first (see 10.5.2 Transaction Recording).
Open the reconcile tool in your bookkeeping software, or use the statement and a spreadsheet.
Enter the statement’s ending balance and date.
Check off each transaction that appears on both the statement and your books.
Look at what’s left. Add missing bank fees or interest. Fix typos and duplicates. Leave checks that truly haven’t cleared yet as open items.
Get the difference to zero. Don’t force it with a “plug” entry. Find the cause.
Question anything you don’t recognize. Call the vendor or the bank right away.
Save the reconciliation report with the statement.
Have someone other than the bookkeeper review it when you can (see 10.6.8 Separation of Duties).
Repeat for every account.

What proof to keep

The monthly statement for each account
The reconciliation report showing a zero difference
Notes on open items and any corrections
The reviewer’s initials or sign-off, if you use one

Keep these by year and account in your bookkeeping folder.

Common mistakes

Only reconciling the checking account and skipping cards and processors.
Using a plug entry to make the numbers match.
Accepting bank feed matches without looking. A feed can match the wrong transaction.
Letting old open items sit. A check that never clears after months needs follow-up.
Changing a month you already reconciled. That breaks the next reconciliation. Ask your bookkeeper first.
Reconciling once a year at tax time. By then the trail is cold.

When to get help from a pro

A bookkeeper or certified public accountant (CPA) can fix accounts that haven’t been reconciled in a long time. Questions to ask:

Can you clean up the months I’ve missed and show me the open items?
Which accounts should I be reconciling each month?
Who should review my reconciliations so one person isn’t checking their own work?

Bill’s note

[Bill: add a short note. For example, how you schedule reconciliations for SiteSmarty, or a time a monthly review caught a charge for software or a service nobody was using.]

How I did this for SiteSmarty

[Date I did this:]
[What I actually did, step by step: which accounts I reconcile, what day, and who reviews]
[What it cost and how long it took:]
[What surprised me or what I’d do differently:]
[Screenshot or photo to add, with private info blurred: a completed reconciliation report]
[Result so far:]

Questions people ask

How often should I reconcile? Monthly, for every account. The IRS recommends reconciling your business checking account each month.

What if my books don’t match the bank? Look for missing fees, uncleared checks, duplicates, and typos. Keep going until you find the cause.

Do I need to reconcile credit cards? Yes. Cards, loans, and payment processors all need it.

What is a reconciliation report? A summary from your software showing the statement balance, cleared items, open items, and a difference of zero.

Audit check

Question: Is every bank, card, loan, and processor account reconciled each month, with a saved report and zero unexplained difference?
Pass looks like: A reconciliation report for each account and month. Open items explained. No plug entries. A second person reviews when possible.
Fail looks like: Months without reconciliation. Only checking reconciled. Unexplained differences. Old uncleared items nobody followed up on.
Evidence to collect: The last three months of reconciliation reports for each account, with matching statements.

Where this fits

Do this first: 10.5.2 Transaction Recording

Do this next: 10.5.4 Receipt Storage

Sources

IRS, Publication 583, "Starting a Business and Keeping Records" (checked October 17, 2026)
Small Business Administration, "Manage your finances" (checked October 17, 2026)

This page explains general rules and Bill's own experience. It is not legal, tax, or insurance advice. Talk to a qualified professional about your situation.