It will happen eventually. As your business grows, you will at some point outgrow your current accounting system, whether you started out with a manual ledger, an Excel or Lotus spreadsheet, or simply a shoebox (or refrigerator box, depending on the number of receipts your business accumulates).

The need for a new accounting system may manifest itself in many different forms. You may find that payroll is becoming more onerous to calculate and track as you hire more employees. If you run a manufacturing or resale business, you may keep running out of stock on high-turnover items because you are out before you know it. If you run a service business, you may start losing track of how much time should be billed to each customer. Regardless of the various symptoms, the problem remains the same: your bookkeeping system is taking more of your time than it's worth.

There is always a balance in any small business enterprise between time and money. You can spend either time or money (or both). Scrimping on one will cost you more of the other. For example, if you decide to buy the least-frills accounting package that you can find on the shelves of your local office supply store, you may spend an extra 10 hours per week forcing it to do what you want it to do. If you could take that 10 hours and sell more to your customers, then it perhaps would be worth spending more on the bookkeeping software package.

Recently, Deloitte & Touche did a study of the top criteria used by businesses when selecting their bookkeeping software. It's quite interesting to see that first-time business owners and seasoned entrepreneurs have different priorities in this regard. This would suggest that experience teaches business owners what's really important when choosing financial software.

The top three criteria used by first time business owners are:

1) Price of software
2) Ease of implementation
3) Ease of use

These reasons make sense. They are all important things to consider in the purchasing decision. But now take a look at the top three criteria used by businesses selecting their second bookkeeping system:

1) Level of support provided by the local firm
2) Developer's track record of performance
3) Software's ability to fit the business

What do the experienced business owners know that the neophytes don't? Let's take a look at each point separately.

Level of support provided by the local firm- many of the entry-level accounting systems are billed as being

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