Like the bond tax payment scheme.  Yeah, they'd love that, but would likely be knocking on your door with a collection notice as soon as they got the payment.  What I have found in delaying Fed tax paments is this:  there is a cutoff point below which there is no penalty for not making quarterlies.  It used to be around 2grand and might have been increased to 3.  I need to check this myself as I delay paying taxes untill it suits my cash flow and capital preservation.  What has happened to me is at the end of the year I might owe an additional 2500 as in 2011 for which I took an extenssion until Oct. 15 to pay because I knew I would have the Account Recievables available to maintain the cash I feel comfortable having access to in my business account and because I max out my contribution to my SIMPLE IRA @ $13,500.  I don't remember what the cost of the penalty was but I considered it small change and was less than $500, probably like $200 and there was interest on the unpaid taxes, but the IRS interest rate is only 1/2 of 1% per month so it was again small change.  Delaying the tax payment of the 2500 only cost me around $180 [ I know this contradicts myself by not including the penalty payment but it was so minimal I didn't sweat it].  I included the interest payment with my late tax payment [ I do my own] and sent it in.  6 weeks later I get a check back from the IRS for about $700.  WTF?  Well, I hadn't taken advantage of line 63 or 64 or something which is a small business tax credit, which they had recalcuated for me and paid me for.  Really.  I know their reputation is pure Evil, but hey, I can't complain.  Sales this year have increased tremendously for me and my tax consequence with it, so I am looking to have an accountant prepare my taxes for 2012 so I can make the best deal of the business advantages, but late payment still doesn't loom too large of a threat to me.  It does of course drive accountants crazy to see someone conduct business/money matters like this.  They are as compulsive with numbers as we are with pipe fitups.

As far as accountants go, they all have their own opinions how things are best handled and you don't always get what you pay for.  As an example, when I spoke with a CPA [step up from an accountant] when I began selecting someone to handle the books, we discussed due dates on IRA contributions and this person assured me beyond a shadow of a doubt that my Oct. payment of my SIMPLE IRA contribution was going to be rejected as late and I would have to refile my 2010 taxes and pay additional penalties, taxes and interest.  They were wrong.  And were willing to charge me a lot of money to continue to be wrong.  Traditional IRAs need to be paid into by April 15, but SIMPLE IRAs have until due date PLUS extensions.  This has been confirmed in writing by the IRS.  I suppose the difference is traditonals come out of wages, whereas SIMPLES come out of business earnings.

As far as making your money work for you while waiting to pay taxes, the only advice I might offer is so obvious you've already thought of it yourself:  Only invest it in something that is as unspeculative as possible because you simply can't afford to lose principal.  Most large GCs are given an option in the Main contract to choose which investment vehicle they want their retainage to be held until job completion.  Those vehicles are most usually bonds and CDs because they pay a fixed rate and are the most conservtive.  They don't pay much but the risk is very small of default.  My thinking is that since anything you'd get out of holding that money is really free money anyway and too costly to risk so you take what you can get.  I'm sure you know you can put money in short term, 1 month, 3 month ect. CDs so you have a continuous rollover and available cash.  Downside is of course they pay almost nothing.  Upside is they are FDIC insured, which is something important to consider when it comes to neccessary capital.  My feeling is unless one is talking rather large 6 figure accounts, the interest earned doesn't amount to that much anyway.  5 figure accounts don't get the Money Men all that excited except to maybe think of ways to charge you hefty fees on unneccessary transactions that don't make you money but which they can charge you for.  For all of this blathering scree from a guy who manages to make his house payments, bills and fund his retirement you likely won't glean anything worthwhile and I'm sure there are some smart guys with way better information, but they aren't calling me with ideas so I figure to just keep paying off all the new equipment I can [deduction time, accelerated depreciation, Sec. 179 write offs] and funding my SIMPLE to the max, and enjoy being a self-employed working stiff.  Of course if I ever save enough to buy a Nuclear Warhead and change the Balance of Power, or a seat in the Senate, well then, look out, we got some new rules coming.

If your accountant did not make clear your responsibiity to pay your quarterly estimated taxes, you need to fire him. Just about every former business owner that wound up in trouble with the IRS , including myself, had the same thought process as you are having. Then you start by not sending in your employee witholding. Hey, I will be sure the money is there when it comes time to pay. Famous last words!
Paying estimated tax is anothe benifit you have being a business owner. You want to make sure your accountant keeps your estimated no more than $500 over your tax bill. If you underestimate, the IRS will slap you with way more than you can make in intrest. Regardless how you think, that 30% is NOT YOURS.
Hire a good CPA, follow his advice. To the letter. You can adjust your quarterly estimated taxes based on the previous quarter P&L If the CPA is good, at tax time you should only have to write the IRS a check for $499.00

You need to pay all tax deposits on time or you will be subjected to letter and assessments to no end. Trust me, they move slow. So your penalty doesn't get posted until there is a penalty for not paying the penalty. And on and on...

you can invest in bonds and still be liquid. Talk to a CFP and tell your needs and you will be surprised at what you can do.

The IRS has been perfecting ways to screw the small businessman for years! They are going to get your money and any interest you might earn on it sooner or later. In my opinion the best thing you can do is the estimated quarterly or pay yourself enough salary so the the withholding covers it then file it on 941. (also quarterly)

For my business I just use one savings account for my reserve fund, sales tax liability and payroll liability. I put it all in one account, mainly to keep it away from the checking acount. Then I keep hand written ledgers to keep up with how much of the savings is dedicated to each liability or fund . Kind of crude accounting but it works for me as long as I stay on top of it!

Thanks for all the replies everybody!! I should have known that if I had a way to actually make a little money off the money I could not spend that the IRS would have already figured out a way for me to not do that! Good info and past experience's, much appreciated!! It's real wild when you start thinking about 30% of everything and then get to looking at the numbers! Still learning, got the welding part down now it's the taxes part!!

Last year was the first year I actually made any money so all of this is very new. As much as I read about it(boring...yawn) life experience really teaches you! Gonna have some penalties already, did not have an accountant last year, did not expect it to end up like it did that's for sure! My current accountant has asked if I would like to send some money in but I have been screwed out of most of my money from the big job I did this year and my lawyer is taking care of the required paperwork at this very moment. I know, should have had money in the bank for taxes already but the truck rear diff explosion cleaned me out in December, not to mention other year end issues. So, I guess I need to bend over and get prepared for the IRS weannie, have received the green weannie from the military to many times to list so I suppose it will be like old times!! LOL!!

"Paying quarterly helps take the sting out of having to pay a huge lump sum at the end of the year. As for Uncle Sam using your money in the interim, it's your fault if you are over paying him with your quarterly payments. Your tax burden isn't something that is an unknown unless you have a very unusual tax situation. You should be able to estimate your current tax liability fairly closely if you keep your books in order".

I have to disagree. If I owe I owe, it doesn't take "the sting out" to pay quarterly because the money is there be it quarterly or annualy. Fed law says quarterly so quarterly it is. With the usual delay in payment annualy would be quite a bit easier in my opinion but the jack booted thugs at irs say quarterly so there ya go.
As for the tax burden being unknown, it most certainly is if you aren't sleeping with Ms. Cleo or some other suitable psycic who's able to foresee the future with accuracy.
In the midst of the great recession, contractors don't enter the new year with any idea of how many or how large of a number of projects will come across their bidding desk. Private proposed projects die like flies when owner capital is tight, regulation kills many others, govt projects have been pretty iffy for several years now. The number of variables defies projection today.
They also have no idea of how many dying contractors will loball the job in order to survive another month or two. They also don't know how many contractors who've traditionally worked in other fields will feel the need to bid work they're unfamiliar with in an attempt to survive. The bonding companies are running a lot of payroll right about now because loball is loball, with owners eating a percentage. Payback for not doing due dillegence and feeding at the low bid trough.
Telling a contractor that he should know what level of work will pass thru, a year ahead is just silly. Wallyworl may have a good idea what revinues will be in 2013, construction contractors do not.
As for paying your "fair share", that's fine, until the GSA geeks spend 7/8 of a million in Vegas for absolutely no productive reason. Plus several thousand other examples of fed/state/local waste of my "fair share" that never make the news.

J

Well, I'm not pissing and moaning I was figuring if I had to store away thousands of dollars then maybe I should benefit from the storage of said money then found out that it would not work from previous posts. Besides, I pay my taxes, volunteered to get shot and and die if needed so if I want to piss and moan I believe I've earned the right not to mention the fact that last time I checked and due to my volunteering and other men and woman like me I still have the right to speak my mind. Perhaps some of my questions are rather novice to the experienced business owners on here that have been at it for many many years. Now that I have an accountant and a lawyer I will direct all further questions to them so I will not sound like I'm pissing and moaning about our government, dang, I just thought of something, half the country is pissing and moaning about taxes, our government and that's just the start, even ol' Ted Nugent has had enough. Guess I'm part of the heard....maybe we all need to stop pissing and moaning.

I was originally from New York State. One of the highest, over taxed places in this country. Property tax, school tax, sales tax, income tax, tobacco tax, beer tax, gas tax, on and on. You know what? Last time I was up there they had bridges closed off because they were falling apart and they had NO MONEY to fix them. How is it that with all the taxes they charge they ended up with no money to maintain the roads? Just because you have more taxes it don't mean that your grass is greener. We have great schools and roads in Tennessee where I'm at and with my land I can bet my taxes would be tripled in New York just for property, then throw in school, income and the lots of taxes equals better life theory starts to slip slide down the ol' porcelain throne pretty quickly. More taxes and "my share" don't mean a hill of beans if you spend the money irresponsibly.

I'll ask my accountant about the tax liability but I'd say he's gonna have a hard time nailing that down. Years one and two about even. Year three doubled gross over previous year. Year four I almost quadrupled the income from year three. Will it stabalize? Get better? Go by last years numbers and I could very well overpay but then again maybe it will double and then I'll have underpaid and then it's penalty time. I have not been in business long enough for it to level off, I don't stick to one particular type of work. Perhaps an average of the four years and base my tax liability off that but with my first two years and horrible as they were I would likely underpay on my taxes for this year and yep, more penalties. Better yet, for each quarter take out 30% of my net and at the end of the quarter just give them that, simple enough. Nevermind what last year was as it is not important because it is not this year.

Yeah, I'll go on pissing and moaning. I've earned it and what the heck, if it irratates folks then it makes it more fun. I'm not buying the whole more taxes is better theory, maybe the spend the money more wisely, stop driving industry out of the country, make the lazy welfare bums get off their "bums" and get a job theory....oh, that's right, we're driving all the jobs even the piddly jobs out of the country. They talk of our country as if we will be bankrupt, in economic ruin and ALL of our taxes are doing what again?? All of the money we owe China? Why are we borrowing money from China if our taxes are our saving grace?