Strategy for small business should tie in with the family

''Most small business men are like the shoemaker's children. They get to work at 7 in the morning and work until 8 at night selling their product and running the store,'' maintains John J. McAndrew, tax partner in the Metropolitan (New York) Services Group for Small Business at Price, Waterhouse & Co., the Big Eight accounting firm. ''They don't have time to plan how to maximize their wealth from the business and integrate it into their family's wealth.''

Defining a small business man is not easy in the first place. The term takes in a broad array of sole proprietorships, ''Subchapter S'' corporations, and businesses that might employ as many as 50 or 100 people. Stephen Forman, director of taxes at the Providence, R.I., office of Arthur Young & Co., however , offers a fairly comprehensive definition: ''The small business man is one who lacks the resources of comprehensive internal management. He doesn't have an internal chief financial officer, accountants, and a legal staff. He has to turn outside the firm for help in these areas.''

When he does turn to professionals in the tax planning area, he is apt to find the Big Eight accounting firms offering awesome 100-plus-page tomes on tax planning. But essentially, they stress two principles that should be kept in mind: maximizing the firm's cash flow through tax planning and maximizing the family's income and wealth by distributing corporate income to low-income family members.

In the family area, Mr. McAndrew points out, the owner should put a high premium on combining his business tax planning with his family's. ''The owner should keep in mind how he will dispose of the corporation's earnings from the time he first structures it. For instance, he can keep the stock of the corporation in trust for his family members, where the dividends of the stock will go to low-income parents or low-income children.'' (By keeping the stock in trust instead of actually distributing it, the entrepreneur is still totally in control of the operation of the firm.)

Randy Blaustein, tax manager at Siegel & Mendlowitz, a New York-based accounting firm, and author of ''How to Do Business With the IRS,'' says an even better way is that, ''if there are children old enough to do even the most menial jobs, have them work for the company a few hours a week - filing, messengering, or answering phones. In that way, you can not only pay them a salary on which they will pay little in taxes, they can make as little as $2,000 a year and be entitled to start a tax-free IRA.''

McAndrew also points to the possibility of interest-free loans to low-income family members. ''There is a lot of opportunity to creatively use these loans,'' Blaustein agrees, adding that ''although taxpayers have been generally awarded favorable treatment on interest-free loans before the courts, it should be done with some circumspection.''

For those who plan to start a new business in 1983, notes James Glass, senior editor of Tax Hotline, a monthly publication devoted exclusively to tax planning , new attention should be paid to rules on Subchapter S corporations. Under Subchapter S, a corporation is taxed similar to a partnership, so that its corporate income is taxed to the shareholders rather than the corporation.

''The new rules are much more liberal than the old ones,'' Mr. Glass comments. ''Many of the old restrictions have been relaxed or removed completely. You can now have 35 shareholders instead of 25, and while formerly you were not allowed to put passive (investment) income into a Subchapter S, now you can. So with the new rules you can put all your stocks and bonds into the corporation and give your children or aging parents nonvoting shares. The children can get the interest or whatever income is coming in at a very low tax rate, and you avoid the double taxation of dividends, since Subchapter S income passes straight through to individuals' income.''

For those more interested in maximizing cash flow in what appears to be another financially sticky year, business owners should pay careful attention to timing capital investments and minimizing estimated tax payments, say Mr. Forman at Arthur Young. ''The timing of capital investments can be quite significant in adding to cash flow and preservation of capital,'' Forman points out. ''For instance, if you buy a capital investment at the end of the year, you get the investment tax credit and still get six months of depreciation for the preceding year. So a company which wants to preserve its cash flow and has a choice, could get an extra benefit by delaying the purchase until December.''

More universally, Forman points out that small businessmen ''should be very concerned about how much cash is going out the door to pay estimated taxes.'' For example, he says, ''a businessman who had a $6,000 liability last year, but has a significant increase in sales in 1983 and expects a $100,000 tax liability , should realize that he need only pay an amount equal to what was paid each quarter last year. ''That way,'' Forman instructs, ''he has the investment use of all that money. Tax planning,'' he emphasizes, ''entails not only the permanent saving of taxes, but the preservation of capital over shorter periods.''

Lastly, Forman indicates a host of matters that apply only to specific businesses. Some may be able to make use of a targeted job credit if they hire minority workers. Manufacturers should consider the implications of using the LIFO (last in, first out) method of accounting for inventory (good during inflationary periods), or whether to use the traditional FIFO (first in, first out) method. And many business owners should explore the benefits of having a qualified retirement plan. Blaustein stresses: ''This is the most important tax shelter any businessman can create for himself.'

Forman, however, cautions that ''this is a function of the number of employees. If there are too many, it may cost too much.'' Mr. Glass of Tax Hotline suggests that ''some businessmen may want to substitute a deferred compensation plan for a pension plan. That way he doesn't have to cover employees.'' But he points out a pitfall. ''There is no guarantee you will get the money. It is a contract with the company, and if the firm goes bust when you retire, you won't get the money.''

Beyond these larger concepts is a host of more idiosyncratic tax tricks which accountants can apply to individual situations. If a business owner has difficulty juggling all these tax considerations, however, he should keep in mind the basic warning of McAndrew at Price, Waterhouse: ''Tax planning is important, but (not) if it is going to foul up business decisions.''