What bank reconciliation is
Bank reconciliation is the process of matching your books to your bank statement so both sides agree. Every deposit and withdrawal at the bank should appear in your accounting records (ultimately as journal entries in the general ledger), and every book entry that moved cash should trace to the bank.
Reconciliation is not the same as importing transactions from Plaid or CSV. Importing feeds the bank side; reconciliation proves your ledger is complete and accurate for a specific account and period.
Why contractors can't skip it
Unreconciled books produce wrong cash balances, misleading profit, and surprise problems at year-end. Contractors juggle operating accounts, payroll, credit cards, owner draws, job deposits, and retainage releases — small mismatches compound fast.
Monthly reconciliation is the minimum discipline serious businesses keep. Bonding companies, lenders, and CPAs assume reconciled cash accounts.
Field example
Books show checking at $42,500. The bank statement ending balance is $41,800. After investigation:
| Item | Amount | Side |
|---|---|---|
| Check #1042 to lumber yard — written, not cleared | −$500 | Outstanding check |
| Bank service fee — on statement, not in books | −$200 | Missing book entry |
Adjust books: record the $200 bank fee. Adjusted book balance: $42,300.
Adjust bank side: $41,800 + $500 outstanding check = $42,300 once the check clears.
Monthly steps
- Pick the account and statement ending date.
- Confirm opening balance matches last month's reconciled closing balance.
- Mark cleared items — every bank line should match a book entry or be explained.
- List outstanding checks and deposits in transit.
- Enter missing items — bank fees, interest, automatic loan debits.
- Investigate duplicates — common with CSV re-imports and Plaid reconnects.
- Document and close — save the reconciliation report.
Common misconceptions
“My bank feed syncs — I'm reconciled.”
No. Sync imports activity. Reconciliation matches that activity to your ledger and explains every difference.
“If the balance is close enough, it's fine.”
A recurring $50–$300 gap is often a mis-coded card payment, duplicate import, or uncategorized transfer — all of which corrupt job costs and 1099 totals.
“Cash basis means I don't need to reconcile.”
Cash basis affects when you recognize income and expenses in reports. You still must prove cash in the bank matches your records.
When balances won't match
| Symptom | Likely cause |
|---|---|
| Off by exact duplicate amount | Same transaction imported twice |
| Off by round number monthly | Bank fee or subscription not booked |
| Slowly growing gap | Unrecorded card charges or owner draws |
| Large one-time gap | Wrong check amount or mis-keyed deposit |
Fix the source journal entries, not just the running balance display.
Next steps with OmniLedgr
Connect your bank via Plaid or CSV, categorize transactions to jobs, and reconcile cash accounts monthly. Logged-in users can open the full in-app article for journal-entry tie-out and software workflow details.