Updated November 7, 2026. Quick answer: Reconcile a statement to your books by starting from the statement balance, adding deposits made after the statement date, subtracting checks that have not cleared, and then checking that bank charges not yet in your books explain the rest. Publication 583 says to reconcile each month and names the same two reasons a statement and a checkbook disagree. A difference that neither explains is an error to find, not an amount to plug.
Why the statement and the books differ
This page reads the primary sources linked under Sources, as retrieved on November 6 and 7, 2026. Publication 583 is the December 2024 revision.
The instruction is “When you receive your bank statement, make sure the statement, your checkbook, and your books agree.” The publication gives two reasons they may not. The statement “Includes bank charges you did not enter in your books and subtract from your checkbook balance”, or it “Does not include deposits made after the statement date or checks that did not clear your account before the statement date.” And the schedule: “You should reconcile your checking account each month.” The quarterly version of the same job is on the quarterly bookkeeping close.
The steps
This order of steps is this page’s, built from the two reasons above. Do the check the publication starts with first: “Before you reconcile your monthly bank statement, check your own figures.” Then:
- Write down the ending balance on the statement.
- Add deposits you made that are not yet on the statement.
- Subtract checks and payments you made that have not cleared.
- The result is the adjusted bank balance.
- Take the balance in your books and subtract any bank charge you have not entered, and add any interest you have not entered.
- The result is the adjusted book balance. The two adjusted balances should be equal.
A worked example
The amounts are an illustration, not from any source. Each computed row is the plain sum or difference of the rows above it.
| Line | Amount | Note |
|---|---|---|
| Statement ending balance | $5,200 | |
| Add: deposit made after the statement date | $350 | Bank side |
| Subtract: checks not yet cleared | $600 | Bank side |
| Adjusted bank balance | $4,950 (computed) | Bank side result |
| Balance in your books | $4,985 | |
| Subtract: bank charge not yet entered | $35 | Books side |
| Adjusted book balance | $4,950 (computed) | Equal to the adjusted bank balance |
When they still do not match
The publication gives the purpose of the exercise: “Make sure that your checkbook and books reflect all bank charges and the correct balance in the checking account” and “Correct any errors in your bank statement, checkbook, and books.” The usual places to look, all this page’s list: a transposed digit in an entry, a payment entered twice, a deposit entered in the wrong month, and a bank error. Fix the entry that is wrong and note the fix; do not book the difference to an expense account to make the two agree.
Other statements
Publication 583 describes the checking account. The same comparison works for a card or payment-processor statement, with the statement’s closing balance in place of the bank balance. That extension is this page’s, not the publication’s.
What to keep
Keep the statement, your reconciliation and the supporting documents behind each entry. The IRS advice on supporting documents is “You should keep them in an orderly fashion and in a safe place. For instance, organize them by year and type of income or expense.” Retention follows the same rule as the rest of the records: “Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.”.
Where an app fits
Matching is the repetitive part. SparkReceipt’s home page says that when you drop in a statement, or the bank feed brings it in (in the US), it pairs each line with its receipt, and Dext’s US home page says it takes on data entry, categorisation, reconciliation and approvals. These are the vendors’ statements; this page has not used either product. Matching a receipt to a line is not the same as proving the two adjusted balances equal, which is the check above, and a spreadsheet does that arithmetic.
Common mistakes
- Reconciling to the books and never to the statement, which cannot catch a bank charge or a payment the bank did not process.
- Letting several months pile up, so one error hides inside a larger difference.
- Booking the leftover difference to miscellaneous expense so the totals agree.
- Forgetting the checks that have not cleared, which leaves the bank side too high.
Related: the quarterly bookkeeping close, Bookkeeping for a One-Person Business, and Receipts and Expense Records for a One-Person Business.
Sources
- IRS Publication 583 (Rev. December 2024), Starting a Business and Keeping Records
- IRS, What kind of records should I keep
- IRS, How long should I keep records
Read from the IRS documents linked above on November 7, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.