Technically, No you don't have to maintain an inventory. However, if don't maintain an inventory, your method of accounting must clearly reflect income and expenses. This would mean
Treating inventory as non-incidental material or supplies.
If you account for inventories as materials and
supplies that are not incidental, you deduct the amounts paid to
acquire or produce the inventoriable items treated as materials and
supplies in the year in which they are first used or consumed in your
operations.
Basically, you would treat your shirts as supplies; but, you can't deduct the full amount paid for the shirts if you have an amount of shirts left at the end of the year. You would reduce your "supplies" by the amount paid for the shirts left at the end of the year. In effect, an inventory.
I think an inventory would be easier to maintain and keep track of.
Beginning inventory 100 shirts $1,000
Purchased 300 shirts $3,000
Goods available $4,000
Ending inventory 150 shirts ($1,500)
Cost of Sales $2,500
See the IRS link for Publication 334
**Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**
