I started my business in February, 2004, investing a sun of half million Rupees, and probably it was Islamic month of Zul Hall. Do I have to pay Zakah on my money in Ramadan, or after one year passes? How should I calculate the Zakah at the end of the year, the whole capital plus the money that I have at that moment in my hand? What about credit sales and credit purchase?
Kindly inform me because I want to give the whole Zakah as I believe that even if one incurs loss he has to pay Zakah as long as he is the person enjoined to give Zakah. People say different things; I want you to clear things up for me so I don't went commit any sin in discharging my duties.

Praise be to Allah, the Lord of the Worlds; and may His blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions.

It is not obligatory on you to pay the Zakah of your business before the end of a whole year.  You can pay the Zakah in advance but it is better not to pay it until the end of a complete year because of the consequences that result from that.

There is a condition on the Zakah which is paid in advance that the person to whom it is given should be in need of it and stay in need of it until the end of the year.  If the latter apostates, dies, or becomes solvent and not in need of that Zakah given to him, in advance, then the money given to him is not considered as a Zakah.  It is obligatory on you at the end of the year to pay the Zakah on tradable items by evaluating them according to their sale price in the market and you add to it whatever money is in your possession when a whole year passes on them.

With regard to your money that you have loaned/lent to people you have to add them to the cash that you possess and should give the Zakah on the total amount.  If you owe people money then you may take off this amount when you pay Zakah of your belongings.  Know that if you have extra personal belongings that are not subject to Zakah such as a extra car, extra house, etc., and you can settle your debts by selling them then you are not allowed to deduct your debt from your amount subject to Zakah.  So, you have to pay the Zakah on your debt too, since you have extra belonging that exceed your necessity.  Then you pay the Zakah on whatever remains if it reaches the minimum amount liable for Zakah, whether you made profit, or loss in business during the year.  The principle for paying Zakah is  that the amount should reach the Nisab at the end of a whole year according to the correct opinion.

Allah knows best.