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Reconciled bookkeeping means every line in your books has been matched to a bank, card or supplier statement, and the balances agree at the end of the period. Most small businesses do it monthly, when the statements arrive. Skip it and the mistakes pile up until year end.
What does it mean to reconcile your books?
Your bookkeeping file says what you think happened. The bank statement says what did. Reconciling is comparing the two, line by line, and explaining every difference.
Most gaps are dull. A cheque you wrote hasn’t cleared. A customer paid on the 31st and the bank posted it on the 2nd. A fee came out that nobody recorded. Then there are the ones that matter: a payment entered twice, a personal expense that landed in the business account, a deposit you can’t identify.
How a reconciled entry looks
Say you buy $2,500 of equipment in Ontario. The GST/HST calculator shows $325.00 of HST at 13%, so the supplier’s total is $2,825.00. That’s the number on the bank statement. Your books should show it in two parts: $2,500.00 for the equipment and $325.00 of tax you may be able to claim back.
If you booked $2,825.00 as the equipment cost, the bank still matches and the account still balances. But the tax claim is wrong. That’s why reconciling the bank isn’t enough on its own. You also check that each amount went into the right account.
| Check | What you compare |
|---|---|
| Bank account | Books against the statement, ending balance |
| Credit card | Charges and payments against the card statement |
| Sales tax | Tax collected and paid against the return |
| Payroll | Amounts sent to the CRA against payroll records |
| Loans and owner accounts | Balances against lender or owner records |
What do the CRA’s record rules say?
The CRA expects adequate records that are kept organized. The general rule is to keep required records and supporting documents for six years from the end of the last tax year they relate to. Some records, such as those on property and share registers, are kept longer. If you file late, the six years start from the filing date.
You need the CRA’s written permission before you destroy records early, using Form T137 or a written request. Destroying them without permission can lead to prosecution. Reconciled books make all of this easier, because each entry points to a document that’s still there.
What to ask a bookkeeper who says they reconcile
We can’t tell you which bookkeeper to hire, and we can’t quote what one costs. We didn’t confirm any fee levels or product claims, so we don’t make them. Here’s what you can ask, though.
- Which accounts do you reconcile, and how often?
- What do I get to see afterward, a signed-off statement or just the ledger?
- Who fixes an error you find in a past month?
- Where are the source documents kept, and can I reach them?
Software can pull bank feeds in and suggest matches. That saves typing. It doesn’t decide whether a $325 charge is tax or a personal expense, so someone still has to look.
Mistakes that break a reconciliation
Opening balances that don’t match last year’s file. Transfers between your own accounts counted as income. A refund entered as a new sale. And the big one: forcing a balance with a plug entry, which hides the error instead of finding it.
If you pay staff, the reconciliation should tie back to the remittance. Our payroll remittance calculator shows $961.03 to send per pay period for one employee paid $3,000 every two weeks in Ontario, and that amount should appear in your bank and your payroll records. For a quick check on whether sales cover costs, the profit margin calculator turns a $60 cost and a $100 price into a 40% margin. To see what a profit turns into after tax, try the corporate tax calculator.
Where the numbers come from
The record-keeping rules come from the CRA’s page on where to keep records, for how long and how to request permission to destroy them early, read on 30 September 2026. The tax and payroll figures come from the calculators on this site, using 2026 rates. This page describes the practice in general and doesn’t speak for the CRA.
Frequently asked questions
What is reconciled bookkeeping?
It means each entry in your books has been matched to a bank, card or supplier statement, and the ending balances agree. Differences are explained, not plugged.
How often should I reconcile?
Monthly suits most small businesses, since statements arrive monthly. Do it before you file a sales tax return or run payroll remittances.
How long do I keep records in Canada?
The CRA's general rule is six years from the end of the last tax year the records relate to. Some records, such as those for property and share registers, are kept longer.
Can I destroy old records early?
Only with the CRA's written permission, using Form T137 or a written request. The CRA says destroying records without permission can lead to prosecution.
Do bank feeds do the reconciling for me?
They import and suggest matches, which saves typing. You still need to check that each amount was coded to the right account, including sales tax.
- Self-employed taxes in Canada: income, CPP and GST
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Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.