September 2025 · Bookkeeping, Small Business, Taxes, Tips

The 2025 Year-End Checklist for Arizona Small Businesses

Five moves before December 31, updated for the tax law that changed in July

September is the sweet spot: far enough from April that nothing is on fire, close enough to December to change what this year’s return looks like.

This year especially: Congress rewrote a chunk of the tax code in July,[1] several changes reach back to January, and last year’s checklist is out of date.

Here are five moves, in order of payoff.

1. Reconcile your books

Reconciling means matching your books against your bank and credit card statements, line by line. Books that look fine in September usually hide three problems:

Duplicate transactions from a bank-feed glitch
Deposits stuck in an undeposited-funds account
Owner draws recorded as business expenses

Each one misstates your income. Fix them this month, while you still remember what that $900 charge from February was. In March nobody remembers, and your accountant bills by the hour to find out.

Receipts are easier than most owners think: the IRS has accepted scanned and photographed receipts since 1997.[2]

So skip the paper pile: photograph each receipt, save it to a folder named for the year, and you are done.

2. Use the safe harbor on estimated taxes

The safe harbor is the rule that protects you from underpayment penalties. Pay in enough during the year and the IRS cannot penalize you, even if you owe more in April.[3]

Your withholding plus estimated payments need to cover one of these, whichever is smaller:

90 percent of what you will owe this year, or
100 percent of last year’s total tax (110 percent, if your adjusted gross income was over $150,000)

Having a great year? Matching last year’s tax is the easy play: completely legal, no forecasting required, and the catch-up happens in April with no penalty.

The penalty for underpaying runs about 7 percent right now, compounding daily, like taking out a 7 percent loan you never applied for.[3]

The third quarterly payment is due September 15, so this is the week to check.

3. Buying equipment? Write it off faster

July’s tax law made two changes for equipment buyers:[1]

100 percent bonus depreciation is back, permanently. Most equipment can now be deducted in full, in one year, instead of spread across many.
The Section 179 deduction cap rose to $2.5 million.

The deduction lands in the year the equipment is placed in service, which is IRS language for the day it starts doing its job rather than the day you order it or pay for it.[4]

Each purchase gets one write-off, and the delivery date picks the year: a truck delivered and hauling on December 30 is deducted on your 2025 return, while the same truck delivered in January is deducted on your 2026 return instead. For any large purchase, the calendar is a tax tool.

One caution before December: a deduction returns cents on the dollar. If new equipment was already in the plan, accelerating it into December is smart. Buying things you do not need to save a quarter of what they cost is still buying things you do not need.

4. The Arizona homework

Arizona keeps things mercifully simple with its flat 2.5 percent income tax. Two items still need attention before December ends.

Renew your TPT license

Transaction privilege tax is Arizona’s version of sales tax. Technically it taxes the seller for the privilege of doing business here, not the buyer, which is why the license is yours to keep current.[5]

The license renews January 1, and after January 31 penalties start: cities charge a late fee equal to half their portion of the license cost.[5]

Renewal takes minutes on AZTaxes.gov, and it gets forgotten every year. Set a reminder for December.

Consider the pass-through entity election

S-corps and partnerships can elect to have the business itself pay the 2.5 percent Arizona tax.[6] That turns your state income tax into a federal business deduction, which matters if the federal cap on deducting state taxes is costing you money.

It needs lead time, because partners and shareholders must get written notice and 60 days to opt out, which makes this a fall decision rather than an April one.

5. Plan a December check-in

Everything above is adjustable in December and locked once you file.

Retirement accounts are the sharpest example. A solo 401(k) generally must exist by December 31 to count for 2025. A SEP-IRA can be opened as late as your filing deadline.[7] Choosing between them is a December conversation, not an April regret, and a free half-hour consultation is enough to settle it.

The bottom line

Reconcile while the details are fresh, pay to the safe harbor, time the big purchases, do the Arizona homework, and have the December conversation.

Most of it takes an afternoon, and you walk into tax season already knowing the answer.