Why would I need GAAP? I run a small business.
My first response to a question like this is…. Do you intend to stay a “small business”? If you want to Scale your business, you need to have standardized reporting.
If you sell handmade items at local craft fairs and wouldn’t want to grow the volume of your business, then I agree. A simple spreadsheet of expenses and revenues will work for you.
If on the other hand, you are starting small and intend to grow, then you need to take setting up your “books” seriously. GAAP stands for Generally Accepted Accounting Principles. That means when you adhere to these principles, others reading your financial reporting will be able to compare you to others in your industry with confidence. This trust will allow investors to take you seriously. Your tax accountant will be better able to assist you with tax planning, because you will be using expense categories that match tax terminology. Banks will be better equipped to complete their due diligence and offer loans. Basically you start speaking the language of the people who can help you grow.
If you are feeling a bit overwhelmed by needing to learn GAAP, we can help. GCM Enterprises can assist you with setting up your books and either maintaining them or educating you to do so.
