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If you’re a small business owner in San Diego, one of the most important steps you can take before tax preparation and filing is reconciling your bookkeeping. An unreconciled QuickBooks file is one of the top reasons tax returns get delayed, amended, or filed incorrectly.
This guide walks you through how to reconcile your QuickBooks file the right way, why it matters for taxes, and includes a tax-ready reconciliation checklist you can use every year.
Why Reconciling QuickBooks Matters for Tax Filing
Your tax return is only as accurate as your books.
Before preparing your business tax return, your accountant relies on:
- Profit & Loss Statement
- Balance Sheet
- General Ledger
If your accounts aren’t reconciled:
- Income may be understated or overstated
- Expenses may be duplicated or missing
- Loans and owner contributions may be wrong
- Cash balances may not be real
This can lead to overpaying taxes, filing extensions, or receiving IRS or FTB notices.
What “Reconciliation” Means in QuickBooks
Reconciling means matching:
- Your QuickBooks bank balance → your bank statement
- Your QuickBooks credit card balance → your credit card statement
When reconciliation is complete, the difference should always be $0.00.
Step-by-Step: How to Reconcile Your QuickBooks File
Step 1: Gather All Statements
Before starting, collect:
- All bank statements for the tax year
- All credit card statements
- Loan and line-of-credit statements (if applicable)
Missing even one month can throw off the entire year.
Step 2: Categorize Every Transaction
Before reconciling:
- No “Uncategorized Expense”
- No “Ask My Accountant” placeholders
- Income, transfers, and owner activity must be clearly labeled
Reconciliation should verify accuracy, not be used to guess categories.
Step 3: Reconcile Monthly (Not Annually)
In QuickBooks:
- Go to Reconcile
- Select the account
- Enter the statement ending date and balance
- Match transactions until the difference equals $0
Always reconcile one month at a time, in order.
Step 4: Investigate Differences
If it doesn’t reconcile:
- Look for duplicate transactions
- Check incorrect dates
- Review deleted or edited transactions
- Confirm transfers aren’t double-counted
Never “force” a reconciliation just to make it balance.
Step 5: Review the Balance Sheet
Once reconciled, review:
- Negative bank or credit card balances
- Old undeposited funds
- Strange loan or owner balances
- Accounts that never change
These are red flags that must be fixed before tax filing.
Common QuickBooks Reconciliation Mistakes
San Diego small businesses often struggle with:
- Skipping reconciliations for slow months
- Mixing personal and business transactions
- Relying only on bank feeds
- Deleting transactions instead of correcting them
- Not reconciling credit cards
These mistakes usually surface right before tax deadlines—when stress is highest.
Should You Reconcile Before Sending Files to Your Tax Preparer?
Yes. Always.
Your tax preparer assumes:
- Accounts are reconciled
- Reports are accurate
- Balances reflect reality
If not, you may face:
- Additional cleanup fees
- Filing delays or extensions
- Amended returns later
Free QuickBooks Tax-Ready Reconciliation Checklist
Use this checklist before tax preparation or filing:
📋 QuickBooks Reconciliation Checklist
Before You Start
- ⬜ All bank statements collected
- ⬜ All credit card statements collected
- ⬜ Loan statements available (if applicable)
Transaction Review
- ⬜ No uncategorized transactions
- ⬜ Transfers properly recorded
- ⬜ Owner contributions & distributions identified
Reconciliation
- ⬜ All bank accounts reconciled monthly
- ⬜ All credit cards reconciled monthly
- ⬜ No forced adjustments
Balance Sheet Review
- ⬜ No negative cash balances
- ⬜ Undeposited funds reviewed
- ⬜ Loan balances make sense
- ⬜ Owner equity accounts reviewed
Tax-Ready
- ⬜ Profit & Loss reviewed for reasonableness
- ⬜ Balance Sheet reviewed for accuracy
- ⬜ File ready for tax preparation
Final Thoughts for San Diego Small Business Owners
Reconciling your QuickBooks file isn’t just bookkeeping—it’s tax protection.
Clean, reconciled books help ensure:
- Accurate tax filings
- Fewer surprises
- Better tax planning
- Peace of mind
If reconciliation hasn’t been done—or hasn’t been done correctly—it’s best to address it before tax preparation begins.