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 urgent, but close enough to December to change what this year's return looks like.

This year, it matters more than usual. Congress rewrote a chunk of the tax code in July,[1] several of the changes reach back to January, and last year's checklist is now out of date.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, and save it to a folder named for the year.

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
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: it is completely legal, it needs no forecasting, and the catch-up happens in April with no penalty.

The penalty for underpaying runs 7 percent a year right now, compounded daily, which works like 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 being spread across many years.
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, not 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 goes on your 2026 return. For any large purchase, the calendar is a tax tool.

Before December, remember that a deduction returns cents on the dollar. If new equipment was already in the plan, moving the purchase into December is smart. But buying something you do not need, to save a quarter of what it costs, is still buying something you do not need.

4. The Arizona homework

Arizona keeps things simple with its flat 2.5 percent income tax, but two items still need attention before December ends.

Renew your transaction privilege tax (TPT) license

TPT 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 keeping the license current is your job.[5]

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

Renewal takes minutes on AZTaxes.gov, but it gets forgotten every year, so 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.

The election needs lead time, because partners and shareholders must get written notice and 60 days to opt out. That makes it a fall decision, not an April one.

5. Plan a December check-in

Everything above can still be adjusted in December, but it is locked once you file.

Retirement accounts are the sharpest example: a solo 401(k) generally must exist by December 31 to count for 2025, while 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.