Month End Reconciliation: What it is & Why Your Business Needs It
June 26, 2025
Whether you’re a coach, service provider, creative business owner, or somewhere in between, there’s one thing every business owner should do regularly: reconcile your bank account(s) at every month’s end.
When you reconcile your business bank accounts, you’re essentially comparing the two different data sets (your bank account and your bookkeeping software) to ensure that they’re both saying the same thing — and notice when they’re not.
But, what is “month-end” reconciliation?
What is Month End Reconciliation?
Month-end reconciliation is the process of comparing and matching your financial records at the end of a month. Bookkeepers do this and recommend this to ensure that your financial statements accurately reflect the transactions that occurred during the month, every month.
Month end reconciliation is one of the best ways to make sure your books are up to date and accurate (which is a must) to prepare for tax time — and generally just know where your money is and that it’s where it’s supposed to be.
Why Your Month-End Reconciliation is a Necessity for Accurate Financial Information
If you want to ensure accuracy in your books, your month-end reconciliation is one part of that process. You do it at the end of the month to make sure that everything recorded correctly, or, if you’re outsourcing your bookkeeping, it’s something your bookkeeper does monthly.
This gives you accurate insight into your business, including your profit, deductions, and expected income taxes. Also, month-end reconciliation can be helpful in identifying fraudulent transactions while you can still take action against them.
Without reconciliation at the end of every month, you could mess up a month and have inaccurate financial statements/information for the entire year if it’s not caught. This monthly process prevents it!
What Accounts Need to Be Reconciled?
Technically, not every account on your books needs monthly reconciliation (some can be saved for quarterly reconciliations), but certain key accounts should be. For example:
- Your business checking account(s), or the primary operating accounts where most of your transactions happen.
- Your business saving account(s), anywhere you’re holding business funds.
- Your credit card accounts, or any business credit cards you’re using for expenses, purchases, or cash flow management.
- Your business loans, also making sure to track your interest separately from your loan principal.
- PayPal, Stripe, or any other payment processor accounts (if you’re accepting online payments, note that these often have timing differences from when sales are recorded vs. when funds are deposited).
The goal is to reconcile ANY account where money flows in or out of your business regularly.
Can You Reconcile Your Accounts on Your Own?
If you’re DIY-ing your bookkeeping, you can and should absolutely be reconciling your accounts! While it can be time-consuming and tedious depending on the number of transactions and accounts you have for your business, it’s one of the most important things for good bookkeeping habits.
That being said, it IS a process you’ll need to get used to! As with doing anything different, it’ll take a minute to learn the best way to do it and where to fit it into your month-end.
