I have a side business with about 20K of income a year. Mainly a service business. I do sell parts to people, but I keep no inventory on hand. When someone needs something I will order it and invoice them. I use the cash accounting method.
How do I handle cost of goods for something when for example I sell something at the end of the year. I order the part, and pay for it, but I do not receive the check until the next year.
Using the cash method, I wouldn't report the income until the 2020 tax year, but what about the cost of goods since I paid for the part in 2019.
