How to Set up a Q-tank

I have empty tanks, extra heaters, a powerhead, tank covers, and an extra sponge in my main tanks filter. When needed, fill, heat, add powerhead with the sponge fitted over the intake, a few chunks of PVC or fake plants for cover--add fish. When it's done, empty, clean, put back in the closet. Put a new, clean sponge in the main tank filter to get innoculated with good bacteria.

The reasons are several. First: the point of a quarantine is to be able to observe the fish without the hussle and bustle of other fish. Second: make sure the new fish is eating. Third: medicate if necessary. With a tank that has fry in it, you compromise all three points, and potentially lose the fry. Having a q-tank that looks pretty is too tempting---you'll end up putting in a permanent resident, and then lose that when some new fish comes in with septicemia. Not fun.

Q-Tank

I assume that you plan to purchase young fish. If so, why not a ten gallon tank? They are certainly cheap as well as large enough to quarantine an angel. I once quarantined a six-inch jaguar in a ten gallon.

One way is the method outlined by OrionGirl. Another way, especially if you are impulsive about buying fish, is to keep a quarantine tank cycled at all times. I recommend an Acquaclear filter. Just use the sponge, no carbon. Have a few spare sponges on hand. Keep the tank cycled with a fairly robust fish. One that is known to be healthy. This guy could be the first occupant of your quarantine tank. Unlike the ones that follow, he just simply will never leave quarantine. Pick a hardy, but unaggressive fish. White Clouds and Corydoras come to mind. A couple of cory cats would work well for your needs. They will just have to go through any medication that you use in the tank. Plastic plants, pots, pvc pipe for furnishings. Pick a good quality heater, since you may have to turn up the temperature to treat some types of diseases. An accurate thermometer, or two. A glass cover. Lights (doesn't have to be fancy), so you can look at the fish closely.

It is definitely a good investment. One that could save you a lot of grief and hard work.

Ammonia

Ammonia is very cheap. There's no need to be concerned about that. Just make sure all of the ammonia is gone before you add the new resident.

The only thing that sort of complicates the scenario is that you want to make it do double duty as a fry grow out tank also. In that case, do what Orion says and transfer some filtration material from your old tank to the new one. That way, the tank will either be cycled or will cycle quickly. When the fry arrives, you can simply make the transfer. And when you give in to impulse and bring home another fish, you can add it to the tank. Although you will lose fry that way.