# How to reconcile a bank account Bank reconciliation for small businesses: how to reconcile a bank statement to your books, step by step, with a worked example and how to find a difference. Published: 2026-10-04 · Spark --- Reconciling a bank account means proving your books and your bank agree. You take the balance on the statement, account for everything that's in one and not yet in the other, and check that you end up at the same number to the cent. It's the one bookkeeping habit that catches almost everything else: a missed transaction, a duplicate, a typo, a bank fee nobody recorded, a cheque that never cleared. If your accounts reconcile every month, your books are probably right. If they don't, nothing built on them can be trusted, including your GST/HST return. ## What you need - The **bank statement** for the month, with its opening and closing balances - Your **books** for the same account and period: the ledger, register or spreadsheet where you record transactions - Last month's reconciliation, so you know which items were already outstanding The CRA lists [bank statements, deposit slips and cancelled cheques](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/keeping-records/what-records-who-keep-them.html) among the records you have to keep, so download the statement and file it while you're at it. ## The steps ### 1. Check the opening balances agree Your books' opening balance for the month should equal last month's reconciled balance. If it doesn't, something from a prior month changed after you reconciled it. Find that first, because everything else will be off by the same amount. ### 2. Tick off every transaction that appears in both Go down the statement line by line. For each deposit and withdrawal, find the matching entry in your books and tick both. Match on amount and date, then confirm with the description. ### 3. List what's on the statement but not in your books These are usually: - **bank fees** and service charges - **interest** earned - **automatic payments** you forgot: loan payments, subscriptions, pre-authorized debits - **NSF cheques**, where a customer's cheque bounced and the bank took the money back - **e-transfers** received that you never recorded Each of these needs to be **recorded in your books**. They're real transactions, and your books are the ones that are missing them. ### 4. List what's in your books but not on the statement These are timing differences, and they usually sort themselves out next month: - **Outstanding cheques**, written and recorded by you but not yet cashed - **Deposits in transit**, recorded by you but not yet showing at the bank, such as a deposit made on the 31st These don't need a journal entry. You carry them on the reconciliation until they clear. ### 5. Do the arithmetic **Adjusted bank balance** = statement closing balance + deposits in transit − outstanding cheques **Adjusted book balance** = your book balance + items from step 3 that add money (interest, unrecorded deposits) − items from step 3 that take money (fees, NSF, missed debits) ± corrections for errors The two adjusted balances must be **equal**. When they are, you're reconciled. ### 6. Record the adjustments and save the reconciliation Post the entries from step 3 to your books. Save the reconciliation, with the date, the balances and the outstanding items, so next month starts from a known point. ## A worked example A café's chequing account for September: **From the bank statement** - Closing balance, September 30: **$8,412.60** **From the books** - Book balance, September 30: **$9,485.35** **Going through it** - Cheque #1042 to the landlord's property manager, $1,250.00, written September 29, **not yet cashed** - A deposit of the weekend's cash, $2,300.00, made September 30, **not on the statement yet** - A monthly account fee of $14.95 **on the statement, not in the books** - Interest of $1.20 **on the statement, not in the books** - A supplier payment that cleared at **$54.00** but was entered in the books as **$45.00** **Adjusted bank balance** $8,412.60 + $2,300.00 − $1,250.00 = **$9,462.60** **Adjusted book balance** $9,485.35 − $14.95 + $1.20 − $9.00 = **$9,462.60** They match. The café records the fee, the interest and the $9.00 correction in its books. The cheque and the deposit stay on the list as outstanding until they clear in October. ## When it won't balance Work through these in order: 1. **Check the opening balance.** A difference that's the same as last month's usually means a prior month was changed. 2. **Look for the exact difference.** A transaction of exactly that amount is often the one you missed or doubled. 3. **Halve it.** If the difference is twice some transaction, you've probably recorded a deposit as a withdrawal, or the other way round. 4. **Divide it by 9.** If the difference divides evenly by 9, look for transposed digits. In the example, $54 entered as $45 is a difference of $9. 5. **Look for duplicates**, especially if you import statements and also type some entries by hand. 6. **Check the dates at the edges of the month.** A transaction on the 1st or the 31st can fall on different sides in your books and at the bank. 7. **Check transfers.** A transfer between your chequing and savings accounts, or a payment to your business credit card, has two sides. If you record one side and not the other, both accounts will be off. Never plug the difference with an "adjustment" entry to make it balance. That buries the error. It will turn up again later, at year-end or in an audit, and by then it'll be harder to find. ## Do it for every account Reconcile **every** business bank account and **every** business credit card, every month. Cards are where unrecorded charges hide: subscriptions renewing, foreign transaction fees, interest. A card statement reconciles the same way, with charges instead of withdrawals and payments instead of deposits. Loans are worth checking against the lender's statement at least once a year too, so the balance in your books matches what you actually owe. ## How often **Monthly**, when the statement arrives. A month is short enough that you remember what most transactions were, and the statement is still easy to download. If you file GST/HST quarterly, reconcile every month in the quarter before you prepare the return. The return is only as good as the books behind it. [How to file a GST/HST return](/guides/how-to-file-a-gst-hst-return) covers the next step. For businesses with a lot of card and cash volume, weekly isn't overkill. The longer you leave it, the harder each difference is to find. For where reconciling fits in the monthly routine, see [how to do bookkeeping for a small business in Canada](/guides/how-to-do-bookkeeping-for-a-small-business-in-canada). If you're doing this in a spreadsheet, [a spreadsheet or software?](/guides/free-bookkeeping-spreadsheet-vs-software) is honest about where that starts to hurt. ## With Spark Books Most of the work in a reconciliation is steps 2 and 3: matching lines and finding what's missing. In [Spark Books](/books), the statement you upload (CSV, OFX or PDF from the major Canadian banks) is where the transactions come from, so every bank line is already in your books. Each one is sorted into a Canadian chart of accounts with the GST/HST split out. When Spark isn't sure what one was, it asks you, and it remembers your answer. Receipts are matched to the transactions they paid for, and invoices to the deposits that paid them. It's free, and there's no card to sign up.