How to Do a Basic Bank Reconciliation

Our Impact Team
Dec 30, 2024
3 min read

Keeping track of your financial records is essential for every business owner. One of the simplest, yet most important tools for ensuring financial accuracy is bank reconciliation. This process compares your company’s financial records with your bank statement to ensure they match.

Let's walk through how to do a basic bank reconciliation in just a few simple steps.

What Is Bank Reconciliation?

Bank reconciliation is the process of comparing your company’s cash records with your bank statement to ensure:

All transactions are recorded.
There are no discrepancies between your records and the bank’s.
Errors or fraud are identified and resolved.

Regular reconciliations help you maintain accurate financial statements and improve decision-making.

Steps to Do a Basic Bank Reconciliation

Steps	To Do's	Helpful Tips
1. Gather Your Records	You’ll need: Your bank statement for the reconciliation period. Your company’s cash ledger or accounting records.	Use accounting software to streamline the reconciliation process if possible.
2. Compare Opening Balances	Check that the opening balance on your bank statement matches the opening balance in your cash ledger for the same period.	If they don’t match, investigate discrepancies carried over from the previous period.
3. Match Deposits and Withdrawals	Go through your bank statement and cash ledger to match: Deposits made into the account. Withdrawals, such as checks or payments, are made from the account.	Check off each transaction that appears in both records.
4. Identify Missing Transactions	Look for: Outstanding Deposits: Payments recorded in your ledger, but not yet reflected in the bank statement. Outstanding Checks: Checks written, but not yet cashed or cleared by the bank.	Record these items as reconciling adjustments.
5. Account for Bank Charges and Interest	Your bank statement may include fees or interest income that aren’t yet recorded in your books. Common examples include: Service charges. Overdraft fees. Interest earned.	Update your cash ledger to reflect these charges and incomes.
6. Check for Errors	Errors can occur in either your records or the bank’s. Common mistakes include: Double-recorded transactions. Transposed numbers (e.g., recording $543 as $453). Missing entries.	Contact your bank immediately if you find errors in their records.
7. Reconcile the Ending Balance	Once you’ve accounted for all reconciling items and corrected errors, the ending balance in your cash ledger should match the ending balance on your bank statement.	If they still don’t match, double-check your work for missed transactions or miscalculations.

Why Bank Reconciliation Matters

Prevents Fraud: Spot unauthorized transactions early.
Ensures Accuracy: Keeps your financial records up to date.
Supports Decision-Making: Accurate cash records allow for better financial planning.
Simplifies Audits: Well-maintained reconciliations make audits and tax filing easier.

How We Can Help

At Loomis Reddick Bishop, we provide expert Accounting, Auditing & Tax Services to help businesses stay on top of their finances. Our services include:

Bank reconciliations tailored to your needs.
Setting up accounting systems for automated reconciliations.
Identifying and resolving discrepancies quickly.

Ready to Take Control of Your Financial Records?

Bank reconciliations don’t have to be a hassle. With the right tools and guidance, you can ensure your financial records are accurate and reliable. Let us help you simplify the process and focus on growing your business. Contact our Impact Team to get personalized assistance tailored to your specific needs.

Schedule A Free Consultation Now