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!