Reconciliation is the check that your books and your bank agree. Done by hand it is the most tedious task in bookkeeping. Done from statements it is nearly automatic.
What reconciliation proves
That every transaction in your books happened at the bank, every transaction at the bank is in your books, and the balances match on a given date. If they do not, something is duplicated, missing or miscategorized, and your profit and loss is wrong by that amount.
The manual way
- Print the statement.
- Tick off each statement line against a ledger entry.
- List what is in the ledger but not on the statement (outstanding checks, deposits in transit).
- List what is on the statement but not in the ledger (fees, interest, forgotten charges).
- Adjust until the ending balances agree.
The statement-based way
When books are built from the statement itself, step 2 is the import. On the Full Books plan, ProfitBooks reconciles every account every month: opening balance plus imported transactions against the closing balance printed on the statement, with any difference flagged so you can find the line that did not parse (usually a faint scan). The Profit plan categorizes and produces the profit and loss without the formal reconciliation.
Card payments and transfers
The classic reconciliation trap: a credit card payment shows up on the card statement and the bank statement. Record it as an expense on both and you have double-counted it. ProfitBooks matches the two and records a single transfer.