Yes, you can use the cash method and not bother with inventory.
If you use cash method and your total average income for the last 3
years was less than $1,000,000 per year, you don't need to use the cost of goods sold section at all.
Instead, you can just write off
your merchandise under supplies or miscellaneous expenses when you purchase it. In this case, your
merchandise purchase in 2017 would be fully written off then as a business
expense. Your 2018 is written off in 2018.
Most taxpayers are
cash basis taxpayers.
Under the cash basis
method you include income you actually or
constructively receive during the year and deduct expenses for your business in
the year you actually pay them.
In
accrual accounting, you report income in
the tax year that you earned it, even if you don't collect payment until the following
year. The accrual method of accounting is often used
by larger businesses that carry inventory or offer credit.
This
also applies with expenses. Under accrual accounting you deduct expenses when you incur them. Let's say you received office
supplies in 2017 but didn't pay for them until 2017. You'd deduct the expenses
in 2017, the year you were able to start using the supplies.
