Reconciling a bank account that has never been reconciled in QuickBooks Online

[@mikas2609]

Thank you so much. This was very helpful as my client has not reconciled ever since 2017.

[@5MinuteBookkeeping]

You're welcome!

[@jellyrcw12]

Extremely helpful! Thank you. I am a new bookkeeper and my client has never done a bank rec before.

[@5MinuteBookkeeping]

Glad it was helpful!

[@jeffgustafson4552]

Oh My

[@SCLana]

Same here, i am a new bookkeeper, and i will have soon a client who never reconcile from 2017:(

[@karelizlopez5279]

Thank you so much! This video was really helpful.

[@5MinuteBookkeeping]

You're so welcome!

[@МарияШитова-д4э]

Thank you so much for this tutorial! I have to reconcile several bank accounts which were never reconciled since 2019, and before watching this video I was afraid even to think about it. Now the task doesn't look so scaring😂

[@5MinuteBookkeeping]

Glad it helped!

[@rickeyhughes7380]

Hello. My name is Rickey Hughes. I have a Bookkeeping and Accounting business of my own. I think the illustration, about doing Bank Reconciliation, was helpful; although, I know how to do it by hand more than I know how to do it using QuickBooks. I think I will need more training in doing Bank Reconciliation using QuickBooks. Thank you for this illustration. Hopefully, I will hear more from you about this.

[@5MinuteBookkeeping]

Hi Rickey. Keep practicing and learning more about QBO. The bank reconciliation in QBO is pretty simple.

[@winkingchick]

At 3:36 he said to date it for Dec 1st, but the example said Dec 31st. Want to make sure it's N not January 1st either??? Do I have to wait for the Dec 31st statement? Can I just go by the balance I have if I have little to no business activity at the time?

[@5MinuteBookkeeping]

It would be dated December 31st.

[@kathylubz2802]

Thank you very informative..

[@5MinuteBookkeeping]

Glad it was helpful!

[@RosePlays456]

Hi, your videos are really helpful. Can u plz make a video on reconciling foreign currency account in QBO as this is a bit complicated.

[@5MinuteBookkeeping]

Hi. I really don't work with foreign currency so I'm not sure if I'd be much help on that, unfortunately.

[@accountingprinciples7760]

Thank you for the informative videos !

[@5MinuteBookkeeping]

Glad you like them!

[@victoria2228]

I know this is an old post but hopefully I can still get an answer to my question- would an auditor take issue with catching up a reconciliation this way? Should I disclose that I’m using this method to my client and get it in writing that they approve?

[@5MinuteBookkeeping]

My content is specific to small businesses. If a business is subject to financial statement audits, they should be maintaining their books using Generally Accepted Accounting Principles and should be reconciling and closing their books every month. This method does not apply to companies that are audited.

[@uroospunyali8861]

Mam, your all presentations are awesome and very useful for beginners. Would you please tell us how to record the reversal checks of account payable or advance payment to vendors? Thanks.

[@5MinuteBookkeeping]

Thank you. I'll add your request to my list. In the meantime, you may want to look into how to void a check.

[@karteekk6905]

Nice video. Above all you are having very beautiful smile !!

[@5MinuteBookkeeping]

Thank you.

[@therealdjt6219]

Thanks for this! Huge help as I’m currently doing a historical rec job for a new client. Client hasn’t paid taxes for 2 years. Should I close books after I finish a previous years’ reconciliation, before beginning the next years’ rec?

[@5MinuteBookkeeping]

Yes, we always close the books in order to prevent making changes to the books once they're reconciled.

[@spennysimmo3006]

Hi, great video. Would you leave the opening balance equity account with a balance after this or journal it to increase/decrease retained earnings? If so, could you create the plug transaction directly to retained earnings?

[@5MinuteBookkeeping]

There are a lot of factors that affect how the adjustment should be recorded. If the entity is a sole proprietor (in the US), I would close out the balance to retained earnings. However, it gets a lot more complicated if the entity is a C-corp, Scorp, or Partnership. Usually, I get the tax preparer involved to decide how to best adjust.

[@alynmahoney]

So what would you do with that opening balance equity transaction when you're done?

[@5MinuteBookkeeping]

You would have to determine whether it would get closed out to retained earnings or be recorded as an adjustment in the current year. Normally, you discuss that with the company's tax accountant to ensure that it won't mess up the retained earnings in the tax return.

[@mattd7770]

@@5MinuteBookkeeping What exactly are the options other than closing it out to retained earnings? What other account(s) exactly could you close the balance (plug amount) in the equity account to?

[@5MinuteBookkeeping]

@@mattd7770 Hi Matt. That's a great question that is challenging to answer depending on various factors. If the client is a sole proprietor, we typically adjust retained earnings as of the end of the prior year. If the client files their taxes as a Ccorp, Scorp, or Partnership (in the US), the process is more involved. We typically accumulate all opening balance adjustments in a cleanup clearing account and get input from the tax preparer as to how they would want us to adjust the books.

[@davidfrisby]

Hi there, I love your video! I completed my bank reconciliation in QBO, as you demonstrated; with no problem. However my question is: Is it important to due monthly reconciliation on CREDIT CARD ACCTS? Or is that not as important as the bank account reconciliation? I am having problems with the CC account reconciliation even though I am doing the same way, I did the back reconciliation. Would accepting transactions in the credit card reconciliation somehow effect the bank account reconciliation? Im talking about payments made from the bank account to the credit card but are not matched, but accepted.

[@5MinuteBookkeeping]

You should reconcile all bank and credit card accounts every month. If you're having problems reconciling your credit card accounts, it may be because you haven't entered the credit card payments correctly in QBO.

[@davidfrisby]

@@5MinuteBookkeeping Do you offer individual help, in finishing my QBO setup, and what your hourly rate is for that help? If you would set an appointment to do a zoom call with me and help me review my account to get it corrected, so I can watch and learn more about my QBO file. I think you are correct, that the payments made from the checking account to the credit card were probably categorized as an expense and not matched to the credit card.

[@jeeofalltrades]

Wow! This is really helpful! Thank you. I am a new bookkeeper and my client has never done a bank recon before. Also, she just wants me to reconcile the present transactions and not include the previous years since previous years' transactions in QBO are from a different company. Would that be alright? Any suggestions, please?

[@5MinuteBookkeeping]

Hi. Sorry for the late reply. You cannot reconcile a bank account in the current year if prior year transactions are incorrect or haven't been reconciled.

[@kaykesx]

Hello, adding a plug in transaction is unsettling. I'm concerned that the previous years are quite out - I cant see that an opening balance was ever entered when the accounts started. Also, the previous years have been filed and anything added will affect those returns. I have read, a journal can be created from the beginning of the yearn that you would like to reconcile but again, this may affect a previous return. So for my example, 01.08.21, then you mark as reconciled and begin reconciling from this date onwards. Would I still be reconciling with a difference?

[@5MinuteBookkeeping]

Hi Kayleigh. I totally agree with you. It is always unsettling when you have to enter an adjustment especially when it affects previous years. It sounds like you are a bookkeeper. As accounting professionals we should always use our judgment and consider how our adjustments will affect prior years. In many cases, we also need to get our client's tax preparer involved to determine when the adjustment should be recorded. Regardless of when you make the adjustment (end of prior year or even 1/8/21), you will have an adjustment and you will need to determine the best method for adjusting it in the books. I cover this in my Complete QBO Cleanup System. You can learn more about it here courses.5mbacademy.com/courses/complete-qbo-cleanup-system

[@joellesater6609]

This video was very helpful, I want to confirm as well that we should try and locate the missing transaction(s) to make sure all data is accurate?

[@5MinuteBookkeeping]

Yes, you are right.

[@realDrLotto]

Hi, thank you for your video! In this example, it seems a bit odd to add a transaction just to account for the difference on paper. What could have caused the $2000 difference and what's the rationale for the Plug Transaction? Shouldn't the solution be to find the transaction(s) causing the difference or add legitimate journal entries that may not have been pulled in correctly? Apologies if I am misunderstanding something here.

[@5MinuteBookkeeping]

Hi. The only way to find the difference in the bank reconciliation is to go back and reconcile the bank account from the last time it was reconciled, if ever. That can take a lot of time but it is always an option if you would like to take the time to do that.

[@ginas9245]

Hello, we transfer from QB desktop to QB online and the begining balance is not matching, this is the first reconciliation that it will get done on QB online. How to adjust the begining balance?

[@5MinuteBookkeeping]

Hi Georgina. If you converted from QBD to QBO and the beginning balances are not matching, then your conversion failed and you need to either do it again or find the source for why the transactions didn't convert correctly. This can be very involved and time consuming.

[@che-chedramatv9749]

Hi Ms. Veronica I was wondering how to reconcile all my cash expenses in QB online? or do i have to?

[@5MinuteBookkeeping]

You should reconcile the balance in your cash account, if there is a balance. For example, if you have $250 in cash but QuickBooks says you have $300, then you would need to record $50 in expenses.

[@che-chedramatv9749]

Thank you.😊

[@joseclaramunt9744]

I have quickbooks desktop and I do not have a function to enter an expense, what is another way to enter that expense? what is the credit of that expense too?

[@5MinuteBookkeeping]

Hi. I don't do tutorials on QBD, unfortunately.

[@florak1087]

Hi Veronica. Great video. I am cleaning up a small company that has never reconciled its books for a year. I have worked on QB in the 90s and just coming back to it and relearning bookkeeping again. I found on one of the bank statements that there were two transactions on the checking account that was for the same vendor but one was noted as paid by VISA and one by debit for the same amount on both. Why would a credit card purchase show up on a checking account? If I do a plug transaction to get rid of this weird entry, would the closing balance always have to be adjusted forward? (I guess the bank has to change that for my client??) Appreciate your view on this mess.

[@5MinuteBookkeeping]

Hi Florita. It sounds like you have a duplicate transaction. I come across that all the time - untrained users duplicate transactions in QBO all the time. I normally delete or void duplicate transactions. If you haven't done so already, check out my Complete QBO Cleanup Course on my online academy at 5mbAcademy.com. You may find it helpful.

[@florak1087]

@@5MinuteBookkeeping Hi Veronica. I was going to answer you back right away but I went to look in the system. There are two transactions on the paper statement and in QBO. Again, one is a VISA payment that somehow got on there. Would I, have to deduct this amount while I await my client to get it fixed at the bank and just keep reducing the final balance for each month as I go along with the reconciliations? Thank you.

[@SCLana]

Hello, my client never reconcile from 2016 and he dont have any statements for 2016/2017. Can i start with 2018? Thank you

[@5MinuteBookkeeping]

You can start with 2018 but you will still have to follow the method shown in the video to get the correct opening balance at the start of 2018.

[@SCLana]

@@5MinuteBookkeeping thank you so much.

[@claris2385]

Hi Veronica! This video was very helpful and I was able to reconcile the bank account.Would this also work if I want to reconcile a credit card account with statement date lest say 12/10 to 01/10? Thanks in advance.

[@5MinuteBookkeeping]

Yes, it works with credit card reconciliations also.

[@mst7430]

@@5MinuteBookkeeping But when doing a plug for a positive difference for a CC, you would not choose "bank deposit" correct? - do you choose "pay down credit card" instead?

[@pabloeverrosadomangual1779]

Excellent, thank's

[@5MinuteBookkeeping]

You're welcome!

[@NgaTran-tf4tt]

If the 2017 income tax has been filed, can we still do the plug transaction and dated 12/31/2017? Will it change the 2017 balance sheet?

[@5MinuteBookkeeping]

That's a great question Nga. If the tax return has been filed then you would not adjust the books as of 12/31/17. You would have to adjust as of 1/1/18.

[@NgaTran-tf4tt]

Thank you so much! This is very helpful! Where is your office located, hopefully you’re in CA :))

[@staceymcgown4269]

Thank you!!!!

[@5MinuteBookkeeping]

You're welcome!

[@jocacruz5700]

Your videos are so helpful and informative. I am trying to do bank reconciliation, the bank account was never reconciled since the beginning, but why is it there's already an amount in the BEGINNING BALANCE when in fact it was never reconciled? I already checked the transactions but the amount in the beginning balance is nowhere to be found. Is this possible? can you please help me fix this. thank you so much

[@5MinuteBookkeeping]

Hi Joca. Open the bank register in the chart of accounts. Look for transaction(s) marked with an R (for "Reconciled"). More than likely, QBO added a beginning balance when you linked the bank account to QBO. If that is the case, click on the "R" next to the transaction to unclear it. You may also need to delete that transaction as well.

[@jocacruz5700]

@@5MinuteBookkeeping I tried it, it works. Thank you so much 😊

[@erili29]

I didn't understand how do you create the plug transaction?

[@5MinuteBookkeeping]

Do you have a specific question? I showed how to do it on the video.

[@mohamedmetawea1851]

Awesome video

[@5MinuteBookkeeping]

Thanks!

[@Benappy253]

Great video! By chance is there a plus and minus to doing this method? Either be it a Plus or Minus balance in the reconciliations? Thank you in advance. I must make a corporate discussion to do clean up, but I trying to understand the possible impact on P & L, Balance Sheet and Taxes. And is it more practical to do this year by year? Rather then a lump some Plug in one year?

[@5MinuteBookkeeping]

Hi Cary. That is an excellent questions. It all depends on whether a Tax Return has been filed for prior years and whether you're able to reconcile the Balance Sheet to a balance sheet on the tax return. This is fairly involved and that's why I cover it in my Complete QBO Cleanup System at 5mbacademy.com

[@nannonriechel3179]

Hi. I followed all the steps but I am not getting a 0.00 difference? What now?

[@nannonriechel3179]

Ok not to worry. I didn't finish the last step. All done now. Thank you!!!

[@zobairzob4706]

You are beautiful mam, and the video is very helpful.

[@5MinuteBookkeeping]

Thank you. Glad the video is helpful.

[@starr3122]

What do you do if its a credit card that's never been reconciled?

[@5MinuteBookkeeping]

Hi. Great question. You would do essentially the same thing as what I described in this video.

[@SCLana]

I will have a client who never reconcile from 2017, today is 2021🙈

[@5MinuteBookkeeping]

Yes, that happens all the time. My team and I have worked on hundreds of cleanups and most clients haven't reconciled their books.

[@kevywilliams3304]

Dec 1 2017??????

[@5MinuteBookkeeping]

Hi. This video was made a few years ago. The process is still the same.