Business credit cards are available to all types of businesses, whether small or large. It is a credit line provided to the business by a bank or other lending institution. It allows your business to withdraw a certain amount of cash to make payments such as loan repayment, payment to suppliers, make essential purchases, or small expenses like taxes or insurance.

This card also creates a credit report that records the usage of credit in the business and how much more is available for use, and it helps determine how much more credit your business can afford. Like all other credit cards, the business credit card also charges an interest when the repayment is not settled before the end of your billing cycle.

A business credit card is a helpful way to obtain a short-term loan quickly. You can make purchases swiftly without having to worry about having fewer funds in the business. Business owners might also provide business credit cards to their employees, usually supervisors or high-ranking staff members. A business should follow a few steps to use their business credit cards effectively.

• Make sure your accounts are appropriately managed: Your accounts should be free of any errors as they will play a vast role in holding a credit card for your business as this will ensure that no unfair charging of interest will be imposed.
• Avoid paying interest: Try to make your credit card balance repayments before the due date on your billing cycle exceeds. This is suggested because interest rates on credit card balances are very high and can lead to serious financial problems if not paid.
• Do not make substantial payments through your card: Try applying for a loan if you want to make larger payments, such as buying a new property or equipment. This way, your credit card limit will not go over, and you can avoid unnecessary payment of interest, which will also be a considerable amount.
• It is unnecessary to issue bank cards to all senior employees: Keep away from giving credit cards to many staff members as this can lead to misusage. You are advised to make some rules for using the company cards and give your employees less freedom to spend to control your accounts. You can set up alerts that inform you about the payments being made to check finances.
• Try to repay the business credit card balance from your business account: You should keep your business and personal accounts separate, as this will make the cash flow statements and bookkeeping more accurate.

If you have insufficient money in the business account to pay off your credit card debt, then you could transfer that amount from your account to your business account. This is important to keep track of your transactions.

A business credit card can be very advantageous if used wisely. It is an excellent source of finance that can be secured quickly, and no extra charges will be applied if you pay the balance by the end of the billing cycle. Even if the size of your business is small, you can acquire it, and this debt is available to all types of businesses.

A business should have control over its transactions and be careful while using the business credit card to avoid complications. This effective use will significantly impact your cash flows and can lead to a positive cash flow. A business credit card provides you with good credit history for future loans and finances.

Use your credit card responsibly by restricting the amount you are using and putting control over it. And try to find a credit card with the slightest interest offered as possible to decrease unnecessary expenses. If you are making large purchases, then plan to spend as much s you can afford to make a quick repayment.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

It is remarkable how technology is influencing every aspect of life. Keeping current trends in mind, it is not too difficult to predict future holds for technology. Businesses are growing more innovative, and the chances are that they’ll continue using innovative and result-oriented technologies for many years.

To say that technology such as Virtual Reality will become relevant soon is an understatement. Introduced as a gaming tech, Virtual Reality and its sibling Augmented Reality is now in the news for all the right reasons. Businesses are always open to welcome more innovative technologies, and it seems that Virtual Reality has made early inroads. Here are four reasons you should consider Virtual Reality technology for your business.

Cutting Edge

Virtual Reality is a combination of innovative technologies. Several companies manufacture and sell VR headsets for gaming and training purposes. The technology creates a virtual environment for the player provided the software and games support it. Software-based simulation is being used for military and personnel training of law enforcement agency operatives. Simulation tools project a realistic environment for users to operate and learn skills.

VR headsets are a marvel of tech as they present an interactive and realistic environment for the user. Some Virtual Reality sets use basic image projection techniques, while Samsung models use smartphones for image projection. Virtual Reality sets like Oculus VR use what they term as an authentic VR experience equipped with proprietary tech that supports crisp and sharp images and industry-leading audio quality.

Similar headsets are being manufactured by other vendors, while some have been in the market for some time and can be acquired cheaply.

Innovative tech meant for all

Designed as a gaming tech, Virtual Reality is fast becoming one-of-a-kind techs for all. With some of the notable companies showing interest, Virtual Reality will become a mainstream tech for entrepreneurs. Interesting, Virtual Reality can become the tech of choice for training and teaching employees in a post-Covid-19 world.

It doesn’t matter where you are in the world, and you can attend a training session from the comfort of your home without ensuring your physical presence. An immersive experience can be achieved using a purely virtual environment where all concerned parties are connected.

Corporate training

The post-Covid-19 world is challenging in many ways. As we know, it is changing like it never. We might need technology to connect with colleagues, bosses, and clients virtually. Arranging meetings is essentially not as possible as it once was. Thanks to cutting-edge tech such as VR, getting in touch and conducting training sessions from the comfort of your home are now possible. Conducting weekly, monthly training sessions using Virtual Reality tech is easy as a breeze.

Just connect with the central server and using your Virtual Reality set’s connectivity options and inbuilt RAM. No buffering will possibly occur, and even if it does, you will not notice it. Just make sure that you have access to a fast internet connection.

Discuss and share ideas

Arranging collaborative meetings using VR tech in the post-pandemic world is an excellent way to stay connected. Share with your teammates’ ideas and collaborate on projects, so they are delivered on time. Like many unique possibilities, VR can also help companies with detailed meetings and interactive sessions.

You can come up with three-dimensional drawings that are realistic and explain in detail. VR headset is designed to reduce all types of disturbances and distractions. This will let you focus on work-related matters only without getting distracted. The VR tech will enable you to communicate with teammates to discuss ideas. Leaders find this tech intuitive for a variety of reasons.

It is much easier to use and easy to handle due to less weight. Early versions of headsets were a little bulky as they were difficult to wear. Versions released later were more streamlined, made of lighter materials, and were easy to wear. These incorporated several improvements compared to their predecessors in technology.

It is safe to say for employee training and running the day-to-day business. Virtual Reality is the way forward. Consistent improvements and incorporation of new tech have made this tech much popular in the gaming and corporate sector. Militaries find this helpful tech enough to use it for personnel training. It only makes sense to use this handy tech at the workplace.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

By: Jennifer Brazer

Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.

Fact Checked By: Brittany McMillen

Calculating the Costs of Goods:
A Complete Guide to Pricing

Costs of goods directly impact your bottom line, representing all direct expenses associated with producing or purchasing the products your business sells. These costs include raw materials, direct labor, and manufacturing overhead—forming the foundation for pricing decisions and profit analysis.

In my 20+ years leading Complete Controller, I’ve seen how mastering costs of goods transforms struggling businesses into profitable powerhouses. The difference between success and failure often hinges on this critical metric—while the average U.S. business maintains a 52% gross margin, top performers can achieve 15-20% higher margins through strategic cost management. I’ve developed this comprehensive guide to help you implement proven strategies that have helped thousands of our clients optimize their product costs and pricing structures.

What are costs of goods and how do you calculate them?

• Costs of goods are the direct expenses involved in producing or purchasing products for sale, including materials, labor, and manufacturing overhead
• These costs form the basis of your COGS (Cost of Goods Sold) calculation, which measures what it costs to deliver your products
• COGS directly impacts your gross profit margin, revealing the efficiency of your core operations
• Understanding these costs enables strategic pricing decisions that balance competitiveness with profitability
• Proper cost tracking creates opportunities to identify inefficiencies and optimize your supply chain

What Are Costs of Goods? Breaking Down COGS

Costs of goods sold (COGS) represents the direct expenses associated with producing or purchasing the products your business sells during a specific period. These costs are directly tied to revenue generation and exclude indirect expenses like marketing, sales, and administrative overhead.

The oil and gas production sector operates with a staggering 58.78% average COGS ratio, while the information sector (including technology companies) maintains a much lower 32.4% ratio. This dramatic difference highlights how industry-specific cost structures fundamentally shape business models and pricing strategies.

Defining critical components

COGS typically includes these essential elements:

• Direct Materials: Raw materials that physically become part of the final product
• Direct Labor: Wages paid to workers directly involved in production
• Manufacturing Overhead: Factory utilities, equipment depreciation, and production supervision
• Freight-In Costs: Shipping charges for incoming materials
• Storage Costs: Expenses related to maintaining inventory before sale

Items generally excluded from COGS include:

• General administrative expenses
• Sales and marketing costs
• Research and development
• Distribution costs to customers

The distinction matters tremendously for accurate financial reporting and strategic decision-making. For example, a candle manufacturer includes wax, wicks, fragrance oils, and production worker wages in COGS, but excludes the marketing team’s salaries and office rent.

How to Calculate Costs of Goods Sold (COGS)

Calculating your COGS accurately provides the foundation for all pricing and profitability analysis. The core formula remains consistent across industries:

COGS = Beginning Inventory + Purchases – Ending Inventory

This straightforward equation captures the flow of inventory through your business during a specific accounting period.

Step-by-step implementation

1. Determine Beginning Inventory Value: Document the total value of inventory at the start of your accounting period, using consistent valuation methods
2. Track All Purchases: Record every purchase of inventory, raw materials, and direct production costs throughout the period
3. Calculate Ending Inventory Value: Conduct a physical count or perpetual inventory tracking to establish remaining inventory value
4. Apply the COGS Formula: Subtract ending inventory from the sum of beginning inventory plus purchases

For example, if a furniture manufacturer started January with $75,000 in inventory, purchased $125,000 in materials during the month, and ended with $50,000 in inventory, their COGS would be:

$75,000 + $125,000 – $50,000 = $150,000

This calculation reveals they converted $150,000 worth of inventory into sold products during January.

Case study: A textile manufacturer’s cost optimization

A mid-sized textile producer faced rising cotton prices that threatened their margins. By implementing precise inventory tracking and cost analysis, they identified opportunities to reduce waste and negotiate better terms with suppliers.

Their systematic approach included:

• Switching to just-in-time inventory management to reduce storage costs
• Renegotiating bulk purchase agreements with key suppliers
• Redesigning production processes to minimize material waste

The result? A 12% reduction in COGS while maintaining product quality, which translated directly to improved gross margins and competitive pricing advantages.

Advanced Cost Management Strategies

Strategic cost management goes beyond basic tracking to actively optimize each component of your COGS. Businesses that excel at cost management consistently outperform competitors in both profitability and market share.

Optimizing your supply chain

Your supply chain represents one of the richest opportunities for cost reduction without sacrificing quality. Consider these proven approaches:

• Strategic Sourcing: Evaluate suppliers based on total cost of ownership, not just unit price
• Vendor Consolidation: Concentrate purchases with fewer suppliers to gain volume discounts
• Long-Term Contracts: Negotiate price stability in exchange for committed purchase volumes
• Raw Material Hedging: Use futures contracts to lock in prices for volatile commodities
• Alternative Materials: Research substitutes that maintain quality while reducing costs

A European DIY retailer achieved an impressive 8-10% COGS reduction simply by renegotiating contracts with their top suppliers. Their approach focused on creating win-win partnerships rather than adversarial price squeezing, resulting in sustainable savings and improved supplier relationships.

Labor cost efficiency

Direct labor often represents a significant portion of COGS, offering substantial optimization potential:

1. Process Optimization: Map and streamline production workflows to eliminate redundancies
2. Skills Development: Cross-train employees to increase flexibility and reduce bottlenecks
3. Appropriate Automation: Identify repetitive tasks that technology can perform more efficiently
4. Quality Management: Reduce error rates and rework through standardized procedures
5. Production Scheduling: Minimize overtime through efficient capacity planning

Dalsin Industries, a metal fabrication company, demonstrated the power of process optimization when they reduced a 9-part assembly to a single piece through innovative redesign and automation. This transformation cut their COGS by 22% while improving product quality and consistency.

Pricing Strategies Beyond COGS

Understanding your costs provides the foundation for strategic pricing decisions, but effective pricing requires looking beyond COGS alone.

From break-even to profit mindset

The baseline approach to pricing starts with covering your costs but must expand to capture appropriate value:

• Cost-Plus Pricing: Adding a standard markup percentage to your COGS (e.g., COGS + 40%)
• Target Return Pricing: Setting prices to achieve specific ROI targets on invested capital
• Value-Based Pricing: Aligning prices with the perceived value to customers, independent of costs

The stark contrast between Microsoft’s 18.7% COGS ratio and Costco’s 86.1% illustrates how business models fundamentally shape pricing approaches. Microsoft’s software scales with minimal incremental costs, enabling high margins, while Costco deliberately operates on razor-thin margins to drive volume through competitive pricing.

Dynamic pricing tactics

Modern pricing strategies adapt to changing market conditions:

1. Segmented Pricing: Offering different prices to different customer segments based on their willingness to pay
2. Psychological Pricing: Using price points that trigger favorable psychological responses ($9.99 vs $10.00)
3. Promotional Pricing: Temporary discounts to drive volume or clear inventory
4. Premium/Economy Lines: Creating different product tiers to capture various price sensitivities
5. Bundle Pricing: Combining products at attractive total prices to increase average transaction value

The most successful pricing strategies align with your overall business positioning and customer expectations. A luxury brand using discount pricing tactics may damage their premium perception, while a value-oriented business charging premium prices will likely lose customers to competitors.

Impact of COGS on Profitability

COGS directly impacts your gross profit margin, which reveals the efficiency of your core production operations. This critical metric provides insights that financial statements alone might obscure.

Gross vs. Net profit margins

Understanding the relationship between different profit measures helps identify specific improvement opportunities:

Metric	Calculation	What It Reveals
Gross Profit	Revenue – COGS	Production efficiency
Operating Profit	Gross Profit – Operating Expenses	Operational effectiveness
Net Profit	Operating Profit – Taxes & Interest	Overall business profitability

 

Tracking these margins over time reveals trends that might otherwise remain hidden. For instance, a declining gross margin with stable operating expenses indicates increasing COGS—potentially from rising material costs, production inefficiencies, or unfavorable supplier terms.

Historical context matters tremendously when analyzing these trends. Consider how U.S. inflation peaked at 17.8% in 1917, driving massive raw material cost increases, compared to 4.1% in 2023. These macroeconomic shifts dramatically impact COGS across industries, requiring adaptive strategies to maintain margins.

When COGS spikes: Identifying root causes

When your COGS suddenly increases, systematically investigate these common culprits:

1. Supply Chain Disruptions: Transportation delays, material shortages, or supplier problems
2. Commodity Price Volatility: Sudden increases in raw material market prices
3. Production Inefficiencies: Higher scrap rates, longer production times, or quality issues
4. Volume Changes: Lower production volumes spreading fixed costs across fewer units
5. Hidden Costs: Previously overlooked expenses now properly categorized as COGS

Diagnosing the specific cause enables targeted interventions rather than across-the-board price increases that might damage customer relationships.

Common Mistakes & Best Practices

After working with thousands of businesses across industries, I’ve observed patterns that separate cost management leaders from laggards.

Pitfalls to avoid

Watch for these common mistakes that undermine accurate COGS tracking and management:

• Inconsistent Inventory Valuation: Switching between methods (FIFO/LIFO) without proper accounting adjustments
• Misclassified Expenses: Incorrectly including non-direct costs in COGS calculations
• Overlooking Hidden Costs: Failing to capture all direct production expenses
• Manual Tracking Systems: Relying on spreadsheets instead of integrated inventory management
• Delayed Analysis: Reviewing COGS quarterly instead of implementing real-time monitoring

Pro tips from Complete Controller

From my experience guiding businesses through financial transformations, these practices consistently deliver results:

• Implement Three-Way Matching: Verify purchase orders against receiving documents and supplier invoices before recording inventory costs
• Regular Inventory Audits: Conduct cycle counts to identify discrepancies before they compound
• Cost Driver Analysis: Identify which specific inputs most significantly impact your total COGS
• Supplier Scorecards: Evaluate vendors on quality, reliability, and total cost—not just price
• Scenario Planning: Model how potential cost changes would impact margins and pricing requirements

One manufacturing client discovered that 15% of what they classified as direct production costs actually represented indirect expenses misallocated to COGS. Reclassifying these costs immediately improved their gross margin visibility and highlighted opportunities for targeted process improvements.

Final Thoughts: Transforming Cost Management into Competitive Advantage

Mastering your costs of goods creates a foundation for strategic pricing and sustainable profitability. The businesses that thrive don’t just track costs—they actively manage them as a core competitive differentiator.

I’ve seen companies transform their financial trajectory by applying the principles outlined in this guide. The key lies in systematic implementation: establish accurate baseline measurements, identify specific improvement opportunities, implement targeted changes, and continuously monitor results.

Ready to optimize your costs of goods and develop more strategic pricing? The expert team at Complete Controller can help you implement these practices with systems tailored to your specific business needs. Contact us today to start your journey toward improved margins and more competitive pricing.

FAQ

How do costs of goods differ from operating expenses?

Costs of goods include direct expenses related to producing or purchasing products for sale (materials, labor, manufacturing overhead), while operating expenses cover running the business (rent, utilities, marketing, administrative salaries). The key distinction: COGS is directly tied to creating your product, while operating expenses would continue even if production temporarily stopped.

Which inventory valuation method is best for calculating COGS?

The best method depends on your business context. FIFO (First-In, First-Out) typically provides the most accurate inventory valuation during inflation and aligns with physical inventory flow. LIFO (Last-In, First-Out) can provide tax advantages during inflation but may understate inventory value. Weighted average works well for commodities or identical items where individual tracking isn’t practical.

Can service-based businesses have costs of goods?

Yes, service businesses can have COGS, though they’re sometimes called “cost of services.” These include direct labor performing the service, materials used in service delivery, and contractor payments. For example, a consulting firm would include consultant salaries and project-specific expenses in their cost of services, but exclude office rent and administrative staff.

How can I reduce my COGS without sacrificing quality?

Focus on efficiency rather than cutting corners. Negotiate volume discounts with suppliers, optimize production processes to reduce waste, implement just-in-time inventory to lower carrying costs, invest in automation for repetitive tasks, and regularly review make-vs-buy decisions. The goal is eliminating inefficiency and waste while maintaining or improving your product quality.

How often should I analyze my COGS?

At minimum, review COGS monthly to identify trends before they significantly impact profitability. Businesses with volatile input costs or tight margins should implement weekly monitoring of key cost drivers. Additionally, conduct comprehensive quarterly analyses to identify seasonal patterns and opportunities for strategic improvements. Real-time visibility into cost changes enables proactive pricing adjustments and procurement decisions.

Sources

• NetSuite. (2024). “Cost of Goods Sold (COGS): What It Is & How to Calculate.”
  • https://www.netsuite.com/portal/resource/articles/financial-management/cost-of-goods-sold-cogs.shtml
• Board of Directors of Canada. “What is the Cost of Goods Sold (COGS).” BDC.ca.
• US Chamber of Commerce. (2025). “What Is Cost of Goods Sold.”
• Sage. (2024). “Cost of Goods Sold: What is it and how to calculate it.”
• Launchnotes. (2024). “How to Calculate Pricing for a Product.”
• NYU Stern. (2025). “Operating and Net Margins by Sector.”
  • https://pages.stern.nyu.edu/~adamodar/NewHomePage/datafile/margin.html
• FasterCapital. (2023). “Average COGS Ratios Across Sectors.”
  • https://fastercapital.com/topics/a-comparison-of-the-average-cogs-ratios-across-different-sectors.html
• Federal Reserve Bank of Minneapolis. (2025). “Consumer Price Index, 1913-2025.”
  • https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1913-
• Dalsin Industries. (2025). “Case Studies.”
  • https://www.dalsinind.com/case-studies.html
• Oliver Wyman. (2014). “Cutting COGS: Going Beyond Supplier Negotiations.”
  • https://www.oliverwyman.com/content/dam/oliver-wyman/global/en/2014/jul/201408OWCutting%20COGS_ENG.PDF
• Wikipedia. “Cost of Goods Sold.”
  • https://en.wikipedia.org/wiki/Costofgoods_sold
• Investopedia. “Supply Chain Management.”
  • https://www.investopedia.com/terms/s/supply-chain-management.asp
• Investopedia. “Value-Based Pricing.”
  • https://www.investopedia.com/terms/v/value-based-pricing.asp
• Complete Controller. “Managing Business Accounting.”
• Complete Controller. “Cut Custom Assembly Costs: 5 Ways.”
• Complete Controller. “Net Profit Margin: Business Essential.”

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Financial advisors are not to be confused with accountants or stockbrokers. The job of a financial advisor is not to help their clients lower their tax bills or deal in the stock market. Their job is to offer advice to clients about the proper saving techniques, setting up a budget, suitable investment options, and ways to earn money.

The right financial advisor helps people achieve financial stability more quicker by providing clients a direction and focus. Choosing the right person for this job is very challenging. A wrong decision, in this case, will result in a chaotic life. Therefore, when choosing a financial advisor, a lot must be considered. Here are five questions you need to address to help you find the right financial advisor for your needs.

What are your Financial needs?

The first and foremost step in choosing the right financial advisor is understanding the type of help one needs. One might need help with the retirement plan, inheritance issues, opting for a loan, divorce, or purchasing a home. On these requirements, a person has to look for a suitable area of expertise and capabilities.

Before one begins searching for the perfect financial advisor, documenting the whole financial situation is a must. It provides a clearer picture of the person and helps them understand their financial standing.

What is your Budget to pay for a Financial advisor?

The cost charged by a financial advisor is the second most crucial step. It is an essential step because it will help people search in the correct cost bracket. People who do not have a set budget struggle in finding the right financial advisor.

This defined budget will help in narrowing down the search. It is essential to understand that there are different ways through which financial planners charge their clients. It can either be commission-based. Some hourly charge rates while some flat charge fees.

The most important things to look for in the payment structure of an advisor are transparency and a track record. Evaluating a financial advisor based on these factors helps people avoid any misunderstandings in the future. Also, it must be noted that a credible advisor will never show reluctance in discussing compensations.

What are the required Qualifications?

Analyzing and evaluating the qualifications of a financial advisor is an essential part of the process. Before choosing the most suitable advisor, it is best to interview a reliable person. During the interview, the topics of licenses and credentials should be an integral part.

Also, asking for referrals is a perfect approach. It should be checked that the licenses are genuine, adequately issued, and from the state where they are providing their services. The best approach in referrals is to ask for at least three references from former clients.

After these references are provided, a person can cross-check to see if it’s genuine or not. Also, they can get in contact with previous clients and run a background check. It ensures that the advisor one is hiring is perfectly reliable. Moreover, it provides people with the required peace of mind.

What are the Characteristics you will require?

There are several factors on which a financial advisor must be evaluated before a decision is reached. These factors include; credentials, ethics, and experience. These factors help in finding out whether an advisor was involved in any criminal activities. Moreover, the evaluation based on these traits can also connect the clients to their advisor’s career background. Knowing how long an advisor has been working in the field determines the level at which they can be trusted.

Are they Compatible with you?

Many people think compatibility is not an issue when it comes to choosing the right advisor. It is one of the most critical aspects of the process. If a person does not feel comfortable discussing financial matters with the advisor, it will not matter what high qualifications an advisor has and what experience they possess. When there is no compatibility between a client and advisors, things become ugly and chaotic.

People must try to meet their potential financial advisors face-to-face. It makes a lot of fo things clear such as their patience, intellectual approach, and practicality. It is very tough to figure out the personality of an advisor in a single meeting, but it does provide a picture of what is to come.

While choosing a suitable financial advisor is best to lead the process through every step mentioned above. Missing out on any of these steps will lead a person to the wrong advisor, and things will get messy. Evaluating an advisor through these steps is best to smoothen out the process and be fully satisfied with the decision.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

While it is ideal for a person to buy everything they need upfront or in cash, that is not always plausible. Most people will need to get a loan from a bank or other financial institution that offers credit products.

While generally, debt should be avoided, when needed, you will need to carefully consider what you need and other factors that will help you secure the loan and minimize debt. The function of any loan is to allow you to achieve something that requires funding you do not have at your disposal.

The type of loan you will acquire depends on your needs, and each has a different process to obtain. Here are the three main types of loans people get and their uses.

Personal Loan

A personal loan is generally used to make purchases such as a car, major appliances, luxury items, and other significant purchases other than a home. Personal loans are relatively easy to obtain if you have decent credit but can carry higher interest rates.

When getting a personal loan, you need to determine the need for the loan. Because the interest rates are generally higher, you need to decide if the reason for the loan is worth the extra cost. If the reason for the loan is not an emergency purchase, you may want to consider saving for the item and making the purchase once you have saved enough to pay upfront or put more down on the item to lower the payments and interest rate.

Mortgage Loan

Most adults, especially those starting a family, will at some point consider purchasing a home. What separates a mortgage loan from a personal loan is that a mortgage loan is in a class of its own, and the interest rates are typically less than that of other types of loans.

This long-term loan has nuances that personal loans may not have. While a personal loan will have a higher interest rate, it is handled differently if you default on the loan. If a mortgage loan goes into default, the lending institution will foreclose on the home and take it back to sell and recoup the remaining amount and, in some cases, make a profit.

In addition to losing your home, you will have a foreclosure on your credit which will stay with you for a long time and can be challenging to overcome when trying to obtain loans or other lines of credit in the future. Therefore, your mortgage payments must be your number one priority when you make payments.

Mortgage loans also often have more terms within the contract, so you must have a professional that will advocate for you during the purchasing process. It is recommended that you take your time reading the fine print because some of the terms can put your purchase in peril even if you pay on time for the most part.

Commercial Loan

A commercial loan is a loan taken out by a company or a business owner to go towards business operations, supplies, equipment, or any other business needs. Often, commercial loans are taken out by new businesses at startups. However, these types of loans can be taken out at any stage of the business.

Multiple factors make a commercial loan unique in comparison to other loans. Often, to obtain a commercial, the business owner or accountant will need to provide the lender with a business plan with a heavy focus on the financial aspects of the business. There will need to be projections and detailed accounting for where the money will be used and how the commercial loan is expected to be paid back.

Conclusion

Before you take out any loan, whether personal, commercial, or a mortgage loan, you have to consider the consequences of obtaining the loan. You need to understand the interest rates and the loan structure and be sure you can handle the debt. Loans are a necessity when making large purchases or financing a business. However, you should not take on any debt unless you are sure you can pay it down.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

When you decide to purchase a car, generally, you will need to finance it. While some have a savings account that will cover it, most will need to take out a loan or obtain some other form of financing. When buying a car, the first thing you should consider, be it the financial or the bank itself, is that you can repay the money they will lend you.

Depending on the circumstances, you may be able to get financing through your bank, the dealership, or associated lending institutions. Wherever you obtain an installment loan, you will need to meet to qualify to obtain the loan. Here are the general requirements to obtain an installment loan to purchase a car.

Age

Most lenders will not give a loan to anyone under the age of 18; therefore, if they want to purchase a car while under eighteen, they will need to pay in cash or have an adult take out the loan on their behalf. In some cases, lenders will allow the underage car buyer to be on loan with a co-signer, but it is rare.

Income

Your income and monthly expenses will determine the loan. Most lenders will be assessing that you have enough income to pay your bills and cover the car installment loan each month. This assessment will determine the car you can afford. Once you have met the minimum requirements, you will need documentation to further determine your car’s financing.

Documentation Required

In addition to the basic requirements, a series of documentation must be presented when financing a car to carry out the financing procedures. The documents that must be provided are:

• Photocopy of the driver’s license
• Photocopy of the last three payroll checks or other income
• Last bank statement
• Proof of assets if you have any

Before Financing

Before financing a car, it is essential to keep in mind specific tips that can go well when returning the money comfortably and without surprises. There are many formulas for this, and some may be less beneficial or comfortable for you.

Loan Repayment

Do not forget that financing what you are doing is borrowing money, so you must consider your budget and your possibilities when buying the car. Acquire a vehicle that fits your economy and allows you to return the money comfortably.

Think that debts are always a negative point when it comes to benefiting from other loans. Also, keep in mind that you will have to pay the registration fee, the road tax, and the vehicle insurance in addition to the car’s fee.

Existing Options

As we have said, you must study all the financing formulas before requesting or processing the loan. What is best for you? You can do it from a bank or a financial institution, and the conditions may vary.

Financial companies tend to be more flexible when granting loans to finance the vehicle since they are usually linked to dealers and share one objective: selling the car. However, banks usually offer better financing options. Which one do you prefer? Value it!

Interest rates: in addition to the total price of your car, financing also acquires the commitment to return something else. To do this, you must consider the interest rate offered when financing the car. This can be fixed, variable or flexible.

Down Payment

Pay a larger down payment to lower the payments and the interest rate. On the one hand, the loan you will have to ask for will be lower, and your long-term debt and you will reduce interest. It is always better to avoid financing 100% of the car.

Conclusion

Now that you know the requirements to finance a car, you need to assess the options that exist in the market and get your ideal vehicle. Financing is a valuable and convenient tool that will allow you to pay for your vehicle in installments while you enjoy it.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

For some reason, one of the most challenging things to do is put money away into a savings account. However, financially, it is one of the most important things a person should do as a financially responsible adult. You must ensure you have savings for emergencies, one for future purchases or college, and another for retirement.

To have a healthy financial future, you may need to have multiple bank accounts to achieve your goals. Therefore, you must understand the types of bank accounts and their benefits and drawbacks to know what account or accounts are right for you. Here are four types of bank accounts, along with their benefits and drawbacks.

Savings Account

The very first account an individual opens in a bank is the savings account. To easily understand, it is safe to say that savings start with this account. To set up this type of account, it is best to deposit a lump sum amount or link it to automated savings. 

Benefits

For parents who wish to teach their kids about savings patterns, the savings account is the perfect option to choose. It is also an excellent option for people who wish to save their emergency funds or the extra cash. A justification for this is that savings accounts charge the lowest fee and high interest rates compared to the fee.

Drawbacks

It looks like a win-win situation, but there are several drawbacks of choosing this account type. As compared to other account types, the interest rate it yields is lower. Moreover, the bank imposes some restrictions on a savings account holder. They cannot benefit from debit card purchases, and some banks restrict the account to the holder to a maximum of six withdrawals in a month.

Checking Account

The critical feature of checking accounts is paper checks. It is an account suitable for depositing checks, paying bills, and making withdrawals. Through checking accounts, many banks offer the option of online bill payments. It helps in streamlining the payments. It is a perfect choice for people who do not keep a considerable balance as the ease check cards bring.

Benefits

A checking account allows frequent access and easy withdrawal of money. It also allows an individual to write checks for the payments of goods and services against the balance of this account. Paying bills online is also one of the fantastic features of a checking account. Open this type of account does not require a considerable balance.

Drawbacks

There are not many drawbacks to choosing a checking account. But there is one that impacts the decision of a person to open a checking account. It is the wrong account type for people who want to earn interest on their savings. It pays less or no interest on the money deposited in the account. Therefore, it is a wrong choice for people who aim to earn interest on their savings.

Money Market Account

A money market account is a combination of checking and savings account. Money market accounts are the perfect option for anyone who intends to keep their emergency funds for a more extended period. An account holder enjoys the features of both a checking and a savings account through the money markets account.

Benefits

The most attractive feature of a money market account for an account holder is high-interest rates. Compared to the savings account and the checking account, the interest rates paid on the deposited amount are the highest. 

Drawbacks

Unlike the checking account, a money market account requires a minimum balance. Some banks have set the minimum requirement to $5,000, and in some banks, this can go as high as $10000. Another drawback of opening this type of account is the limited number of withdrawals. Only three to four withdrawals are allowed per month.

Certificate of Deposit

The Certificate of Deposit (CD) is the perfect option for people looking for an account with the highest earnings. Anyone willing to open a CD account should deposit only the money they do not plan on spending any time soon. When opening this account, one should set a basic CD ladder, through which an account holder can access a portion of their savings at fixed intervals of time.

Benefits

The interest rates paid on this type of account are highest compared to all other types of bank accounts. It makes it a perfect choice for those who want to earn a good amount over their savings by keeping their money in a fixed place.

Drawbacks

A CD account requires a person to commit to locking up their money for a certain period. An individual has to keep their savings locked up for a minimum of six to eighteen months. In case a person wishes to withdraw the money, the bank will impose a penalty. To withdraw the money, individuals are expected to pay the penalty.

Conclusion

Choosing the type of bank account you need depends entirely upon you and your goals. A person has to make this decision based on their nature of saving and other lifestyle factors. Before you decide what type of account or accounts you want to open, you have to examine the benefits and drawbacks of each type.

Knowing all you can about each type of account will help you decide what account or accounts will be best for you.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Are you thinking about getting a new ride? Sick of that old model and looking to change things up a bit? You aren’t alone. Many people put all their energy into finding the perfect vehicle and neglect that they must also pay for it. Getting a car loan is also a vital part of what you need to consider, especially if you aren’t comfortable paying upfront.

Some buyers can afford to pay in cash for the total price of used or new car purchases. If upfront cash purchase cannot be accomplished, you will need to get a car loan to cover the entire cost of the vehicle or at least a substantial part of it. Getting a bad car loan can mess with your wallet and wreck your credit history for years.

If among your plans is buying a car, renewing the one you already have, or having one for the first time, this interests you: it is a decision you should not take lightly. First, there are endless options; the decision you make regarding the type of vehicle you buy will derive the expenses of its maintenance, be it new or used, compact or of imposing dimensions, hybrid or of classic, national, national, or national imported combustion.

You also must consider whether you will do it in a direct and cash purchase or if you will finance the purchase; the latter is a viable option for many consumers who do not have the cash available to buy it but who do have the capacity to pay, a product of constant income.

In that sense, the Federal Trade Commission of the United States (FTC) recommends looking for car financing to analyze first how much you can pay. For this, it is vital that you analyze your monthly income and if these are sufficient and stable to generate a surplus that you can allocate for the payment of fees and maintenance of the car. Even it would be prudent for you to create a reasonable family budget.

The basics of financing a car

Who better than Bank of America to talk about financing, who insists that the essential thing to consider is the amount you must request, the interest rate, fees, as well as the term or expiration date of the vehicle loan.

The loan amount must be a percentage of the car’s value; the difference must be covered by you, with money available at the time of purchase.

The amount to the request must be correlated with your ability to pay.

Remember not to compromise too much cash surplus after your monthly expenses because it pays the credit and gives proper maintenance to the car, including fuel, insurance, and technical service.

The interest rate is the central part of the integral cost of financing, among other fees, including any charges for disbursement, also called “flat fee” revenue stamps, fees, and commissions analysis prepayment.

The interest rate (APR acronym, Annual Percentage Rate) varies depending on whether a new or used vehicle, being generally higher in the second case. Other charges such as the flat commission, generally between 1.5 and 3%, add to the integral cost of the debt; this represents a percentage that will be debited only once at the time of disbursement of the loan capital.

The loan term is another critical variable, which can vary between one to five years; the longer the term, the lower the loan installment. However, you will end up paying more interest amount. Once these variables are known, you must learn how to calculate a loan’s capital and interests and prepare a repayment schedule.

The best way for a borrower to make the financing of a car profitable is to repay the loan in full as soon as possible. Therefore, you should consider the loan repayment terms that are most comfortable for your budget. As an additional fact, I always prefer vehicle loans without penalty for advance payments. Generally, the value of a new car will be the loan guarantee, so the lender reserves the ownership of the vehicle until the loan is paid in full.

Borrowers can also choose to apply for loans against the value of something they already own, such as a local, certificates of deposit, retirement funds, or against the insurance policy’s cash value. In this case, the borrowed object becomes a loan payment in the event of litigation.

In this regard, the British site moneyadviceservice.org recommends not guaranteeing the loan against your home because it can put you at risk in the event of insolvency. Another option to enjoy the freedom offered by a vehicle is the leasing or operating lease. It is a simple rent you pay to the dealer to use the car for a specific time.

Leasing vs. financing

The car’s lease differs from the vehicle loan because, with the first option, the car will never be yours unless the lease agreement stipulates the possibility of the purchase. One advantage is that the monthly payments are lower, according to the FTC, because you are not paying for the car’s property but the expected depreciation plus a rent and taxes charge.

One limitation of the contracts of vehicle-shattering is that you will have to control the mileage. Usually, 15,000 miles per year are stipulated (equivalent to 24,140 kilometers per year); And although you can negotiate a larger payment, this would increase the monthly payment. Whatever option you choose, always remember to make your payments on time; A delay affects your record and credit score and represents delinquency charges.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Every adult that has purchased anything on credit has a credit score. Your credit score gives you buying power when it comes to homeownership or financing a vehicle. It can also affect what you pay for internet and phone services, utilities, and insurance.

Some companies require a specific credit score to be employed with them. A high or low credit score can be the difference between a great job and a good lifestyle and higher interest and debts.

Because there is such importance placed on your credit score, it is essential that you know what yours is and how to get it higher and keep it there. Here are five things you can do to repair, raise, or maintain your credit score.

Be Careful with Credit Cards

A credit card can have a significant positive or negative impact on your credit score when it comes to your credit score. Most people carry at least one credit card though it is suggested that you avoid having one altogether if possible. However, if you feel you must have a credit card, here are a few things to keep in mind.

• Don’t get a credit card with a high-interest rate
• Don’t have more than one credit card
• Make more than your minimum payments
• Always keep the balance lower than 10% of your limit
• Make them a priority to pay off before no to low-interest loans or payments
• Only use your credit card for emergencies

Avoid Debt

While it is understandable that most people don’t have enough cash on hand to purchase a home or car without a loan, you should avoid purchase on credit as much as possible. However, when you do need to carry a loan, here are a few things to consider.

• Shop for lenders
• Get the lowest interest rate possible
• Borrow from a friend or family member to avoid interest
• Pay more than the minimum payment
• Make these loan payments a priority
• Pay them twice a month if possible

Stop Applying for Credit

Many people don’t realize that every time you apply for a credit line, whether a loan, a rental application or a store credit card, those applications initiate a hard credit check. Every hard credit check lowers your credit score. So if you are car shopping or trying to get a discount on your purchase by applying for the store credit card, you are lowering your score. Here are some things you can do to avoid this.

• Don’t apply for cards or store credit; you don’t need to get a discount
• Go to your bank or a lender and obtain preapproval for a car or home loan before shopping
• Use websites that do not affect your credit score to check your score and know what it is before applying for lines of credit

Dispute Your Credit Score

Many people think their credit score is etched in stone and cannot be changed until the credit falls off. While it is true that after seven years old, debt falls off, there are also times when items on the credit report don’t belong there. So here are some things you can do to get bad debt removed from your credit score.

• Dispute old debt that is still on your report after seven years
• Dispute any debt you don’t recognize
• Pay off any debt that is still on your valid credit report

Pay Bills on Time

While financially responsible, working adults should pay all bills on time. Those bills will indeed lower your score if paid late. Therefore, you should prioritize those bills with high interest rates and attachments to credit reporting when prioritizing your bills. Here are a few other things to keep in mind when paying your bills.

• Pay more than the minimum payments on bills with interest
• Check to see if any of your utility or service bills can be attached to your credit score for paying on time
• Make double payments per month on bills with interest

Conclusion

These are five areas of focus that will improve your credit score if you apply them. Knowing your credit score and how it affects your financial health should prioritize every financially responsible working adult.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

People who want to become rich faster need to find new ways to earn while holding on to the money they already have. However, that’s not enough. To grow money, a person needs to make intelligent investments. It is essential to invest in things that will offer a reasonable return.

An excellent investment can offer interest and dividends from savings, real estate, etc. To become a successful investor, a person must be entirely devoted and focused. Due to advanced investment options, now a person can start investing with a little as $10. Here are some things you need to know before you invest.

Why Should You Invest?

The main reason to invest is related to the growth of money. Investing allows a person to earn potential compound returns. Thanks to compounding, a person can earn a million-dollar by just investing one. People who make intelligent investments are often more affluent as compared to those who don’t.

Investing sounds a lot more intimidating than it is. Even though every worthy investment has some risk, there is always a more significant portion to gain. Investing can be scary, especially if the person is new. Below are a few innovative ways to make money grow through investing.

Risk Vs. Reward

It’s no secret, investing comes with a risk. Everyone knows somebody who lost all of their money investing in the wrong places. Some people lost money due to bad decisions. Others lost due to scams. However, if you invest wisely, a person can reduce risk.

The best part about investing young is that a young person will likely invest long-term, for example, in a retirement account. Such investments aren’t only less risky but also give more significant benefits. Investing can be risky and scary at times, but a person who never took a risk never did anything.

Where Should You Invest?

Choosing what to invest in can be tricky, especially if the investor is new. There are many investment options available in the market today. Below are a few worthy investing options that one can consider:

Mutual Funds: In this type of investment, an investor will pool a person’s money with other investors. The fund manager will utilize that amount to buy a security for the whole group. According to experts, new investors should invest in mutual funds rather than individual stocks due to the low-risk factor.

Mutual funds allow a person to invest in a considerable portfolio regarding stocks rather than just relying on one stock. They aren’t only safer but also require fewer investments. Buying mutual funds through a fund company such as Fidelity will save a lot of money on trade commission; however, mutual funds can also be purchased through any brokerage account.

Retirement Accounts: To save for retirement, IRA gives a certain amount of tax-related advantages. The downside depends on how much a person can fund to that account yearly and when they can withdraw the money.

Traditional IRA: With such accounts, a person’s contributions can qualify for deductions on their tax returns. There is a potential that those earning will also become tax-deferred until a person’s retirement age.

Real Estate: No doubt, investing in real estate can change a person’s life in days. Investing in real estate is a long-term process, and a person can also choose to rent their property for monthly rent. The best part about real estate is that the property’s value will only go up along with the rent with time. However, just like any other investment option, real estate also has a few risks that a person should consider before investing.

Conclusion

There is no question that you should be investing your money. Investments are a way to secure your future and ensure that you can retire with ease. It is a matter of learning how and where to invest. If you aren’t comfortable making investment decisions independently, you can always hire a professional to help you make the best investment choices for you.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.