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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4452
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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My part-time online business is showing 26K net profit for

Customer Question

My part-time online business is showing 26K net profit for 2016 FY ending in Dec 2016. I am working on extending that business and will require me to pay for inventory and new business cost in January 2017. What is the best way to avoid paying tax on 26K profits?
Submitted: 12 days ago.
Category: Finance
Customer: replied 12 days ago.
Buying inventory upfront before end of 2016 is not a choice
Expert:  Rakhi Vasavada replied 12 days ago.

Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

Though this is little open ended question and broad in nature, let me try and put you in some direction.

You have a month and a half to go before 2016 ends. Having said this, to begin with, you will have to focus on the "expenses" that you can claim as deduction. Make sure, that for your current part time online business, you have ACCOUNTED FOR and DEDUCTED all of your operating expenses of any nature. See that none of them are left out. Further to this, try and make as much revenue expenses (operational expenses) that you can make for your requirements post 2016, as all these would be deductible.

Note that purchasing inventories will not solve your issue as you are creating "current assets" and not incurring any operational expenses. Operating expenses are the area you need to concentrate on.

This will reduce your taxable net profit and therefore your taxes.

I am sure this would help.

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Warm Regards,

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