GAAP is the standardized set of accounting rules used in the United States, built so that financial statements from any company are prepared consistently and can actually be compared to each other.
GAAP governs when revenue can be recognized, how expenses are matched to the periods they relate to, and how assets and liabilities are valued and reported. It's the accrual-based framework underneath a proper income statement, balance sheet, and cash flow statement.
Most early-stage startups don't run fully GAAP-compliant books day to day, and that's usually fine at a small size. It stops being fine once outside diligence starts, because investors, acquirers, and auditors read financials against a GAAP baseline whether or not the company built them that way. Getting books GAAP-clean before that request lands beats scrambling to restate them afterward.
Add your revenue and website for a full diligence brief, reviewed by a CPA who ran EY's West Coast R&D Tax Credit practice for 13 years.