One of the unique aspects of living and working in Washington is that residents constantly witness how presidential elections shape policy and, in turn, how those policies directly impact daily life.
For some people, policy changes seem irrelevant, but for a growing number of Americans working in small businesses, presidential policy is crucial. These policy shifts that change with the sitting president can often mean the difference between having a thriving business, or no job at all.
In September, Vice President Kamala Harris announced her economic plan to help small businesses grow. This plan, which she has called her “Entrepreneurs and Innovators Policy Plan,” attempts to address some of the biggest issues that small business owners face when starting and growing their businesses.
The Washington Blade sat down with several LGBTQ business owners in Washington to discuss how they feel the vice president’s plan could impact them if she gets elected.
David Burton, the owner of the Capital Candy Jar, a candy maker and shop, was excited to hear about the policy’s goal to increase access to capital for underserved communities, especially within the LGBTQ community.
When he began his candy business 10 years ago, Burton lacked the large access to capital he needed to get things started, so he relied on generous hello from family and friends.
“This is going to be a game changer for a lot of startups,” Burton said. “When I was first starting out I was calling friends and family and maxing out every credit card I had, begging people to loan me money for three or four months until I could get through the holiday season and pay them. Luckily, I had some very generous and really kind people in my life that were able to help me.”
This issue of high startup costs is not unusual for small businesses. These high initial costs can act as a barrier for potential entrepreneurs.
Jimmy Hopper, owner of Three Fifty Bakery in Dupont Circle, says he experienced these issues when he opened the bakery 10 years ago.
“For new business, it’s really tough,” Hopper said. “You can either use your own money or you get loans from friends because banks will not give you a loan unless you have collateral. When I opened the bakery, I pretty much spent all of my savings, my retirement, everything to open the bakery, because there was nothing available for me.”
One of the ways the vice president is attempting to alleviate this stress of high startup costs is by launching the largest-ever direct federal investment in small business incubators and accelerators. This program would provide small businesses with resources, mentorship, and networks during the first few years of the company to encourage growth.
In her policy, Harris wants to change the startup expense deduction of $5,000 to $50,000, which is 10 times bigger than it stands now.
Joshua Hill, the co-founder and principal at Hill & Hurtt Architects and president of the Equality Chamber of Commerce, Washington’s nonprofit LGBTQ business organization, feels this policy could especially help LGBTQ business owners when starting up.
“I think so many LGBTQ businesses, and potential future business owners are starting at a disadvantage, potentially, right?” Hill said. “They have been discriminated against in their workplace. So they launch their own business. And in the D.C. area, it’s a lot better than it is in other parts of the country, for sure, or other parts of the world, but they’re still starting at a disadvantage.”
Hill continued, saying that providing this access to capital is one clear way to alleviate these disadvantages.
“Most people don’t have the opportunity to sock away 50K for living expenses while they’re making nothing and building their business,” he said. “I think that, certainly for me, would have helped just move things along more quickly.”
Another large aspect of Harris’s Entrepreneurs and Innovators Policy Plan is to simplify tax filing for small businesses.
The way that taxes are collected for small businesses in the U.S. is very complex and requires lots of information from the business owner. A very simplified view of this process includes finding the right tax form (singular owners use one tax form whereas corporations and partnerships each have their own different set of forms), report on the income and payroll of the business, calculate their sales tax, claim deductions and credits for various business expenses, calculate state tax, and then pay off the taxes.
This complex taxing process has lots of places where one error in reporting could cost a business time, money, or possibly jail time.
Harris’s plan advocates for the development of a standard deduction in the tax code, like how individual people file taxes that Harris argues can save small businesses time and money by simplifying filing.
Every person the Blade interviewed did say they hire a tax expert, either an accountant or a tax attorney, to help them keep their taxes in line. Collectively, the business owners felt that by simplifying how the business taxing process goes, their businesses could save time and money.
“Once you get into business, unless you’re an accountant, you probably have to pay someone to do your business taxes,” Burton explained. “The problem is, the bigger you get, the more they charge you. And that can add up very quickly, the bigger you get in the more complex it gets.”
Another concern raised by some LGBTQ business owners is the lack of a unified system for filing different levels of taxes, which makes the process more challenging.
“I think that’s where the most challenges were because you have the state, the local, federal, and it’s a lot of filings to keep track of, especially someone who doesn’t have a huge tax background,” said Hopper. “And a lot of the forms, in my opinion, are unnecessary but you still have to file them- even if they’re [the tax] $0, or you get assessed with a penalty.”
Hill, whose architecture firm works in Maryland, Virginia, and D.C., felt that he was having difficulty making sure that he complied for every state he worked in.
“As an architect where our business is in D.C. but we do work in Maryland, the income that we make from clients in Maryland has to be reported differently, and it’s taxed differently,” Hill said. “That goes for any companies that are a service based company. So it can get complicated pretty quickly. The more simple it can be, that’s another win on the financials, with time and money savings. Wouldn’t you rather be spending that time building your business or marketing or doing the things you love, instead of filling out tax forms or paying someone to do that?”
Harris’s plan also calls for 25 million new small business applications by the end of her first term. The plan explains this can be achieved by reducing excessive occupational licensing requirements, encouraging states and local governments to cut red tape, expanding capital to underserved communities — including the LGBTQ community, and by expanding the rural partners network nationwide to all states and territories.
The business owners also mentioned this ambitious goal, which reflected many of the points they had made earlier — specifically by supporting small businesses and simplifying red tape.
“I think you have to make it easy for people to start businesses, because there are a lot of regulations and roadblocks,” Burton said. “It seems that it’s very challenging to learn all the regulations as you start a business. So you might have a great idea, but then all of a sudden, you go to get your business license and find out ‘Oh, there’s all these other things you have to do.’
I think anything that can be done to remove regulatory roadblocks to starting businesses is going to help, because it’s not just LGBT ones. And then the second one, I, as I said before, I think is access to capital. I was super fortunate that I had savings and things that I could live on for the first year and even partially for the second and third years. But most people don’t have that, and so you might have the greatest idea in the world, but if you can’t afford to feed yourself, then you’re not going to start a business.”
Hill was surprised to read that during the Biden presidency a record 19 million new business applications were filled and felt if the focus stays on nourishing the small business that make up America, Harris can do it.
“I was pretty impressed by that stat, because the 19 million in new recorded business applications was from the start of the Biden-Harris administration, so three and a half-ish years, and now our goal is 25 million in the first year,” Hill said. “It’s a huge jump. I kind of see this as two, as two parts.
“One is the investment in the main streets and even the bids, would be really important. It’s interesting, because you can walk down the street and you can, like, all over the city, and there’s lots of missing teeth. There’s lots of shops that closed after COVID or shops that have closed because the COVID impact was just too much for them. And it seems like it’s taking a long time to get new folks to move in and start up. I feel like that, as a broad generalization, is happening all over the country. We live in D.C., where I think things are generally more stable than most parts of the country.”
“I think the other thing would be to not just focus on those main streets and bids in general, but also specifically in areas that need more money,” Hill added. “Places that have been either devastated by natural disasters that are low income, the places where parts of the infrastructure that need to be updated, that are that are falling apart. I feel like we really need to focus on those parts of our cities and do it in a way that, I mean, this is me getting on my soapbox a little, but do it in a way that really is about lifting up the people in the communities that are there, and the cultural heritage of those communities, and not just tearing things down and moving people out and gentrifying the area.
I think that if you’re really serious about this 25 million new business applications in the first year then I think that those are places where you can do a lot.”
Hopper, on the other hand, felt the focus should not be on getting a goal of applications in, but rather on supporting the small businesses currently struggling.
“So what gets me there a little bit, is applications,” Hopper said. “It’s easy to get applications, but how hard is it going to be for those applications to get any kind of funding? It is kind of everything we’ve talked about with helping a small business. If you don’t do that, you can have all those applications, but none of them turn out to be a business that’s actually opened unless you really back it up.”
Then, Michael Graham, Hopper’s partner, chimed in and explained he felt this could be achieved if more support was provided as the business grows through a sort of government assisted networking or mentorship program.
“I drive by coffee shops in areas, and I’m like ‘I know what it takes to run that here,” Graham said. “‘We’re in Dupont, I know how many cups of coffee you have to sell, how many people you have to have come in to make it.’ So when you see a business that opens and you’re like ‘Okay they just, if they did this, and if they did this it would make them successful.’ So I think maybe if the government had a better understanding, or putting that information out there through all of the agencies that you have to deal with, with opening a business, if you knew your LGBTQ contact for that department that would be super helpful, at least.”
One thing not mentioned in Harris’s plan that these business owners felt would greatly help improve the growth of LGBTQ businesses is to get a designated protected class status for the LGBTQ community. This status would safeguard LGBTQ people against discrimination from businesses and government entities.
This, although it would greatly help all aspects of being a member of the LGBTQ community, is difficult to achieve. This would require congress to pass legislation codifying the group as a protected class into law.
Burton believes that gaining this protected status and securing access to the 5 percent minimum of jobs reserved for minority-owned businesses within government contracts would strengthen the LGBTQ business community.
“The full 10 years we have been as an LGBT owned business, and every year, especially during pride month, I get a lot of business from people wanting to support LGBT owned businesses. There is nothing in the federal government right now that requires the federal government to support specifically LGBT owned businesses. Putting that in, I think that it would benefit all LGBT owned businesses.”
Hopper and Graham agreed, but felt the status impact on directly protecting discrimination lies at the heart of it.
“Let’s be real,” Graham said. “We are a minority, and we’re still fighting for our rights every single day.”
“If we were both straight white guys and we were opening a business anywhere, we’re not going to ever be discriminated against,” Hopper added. “A building owner isn’t going to be like, ‘Oh, you’re two straight white guys. I don’t want to lease to you.’ But I could see some businesses where you could go to the landlord and be like, ‘We want to lease your space for a kitchen,’ only to find out that they are not going to lease to you because they don’t agree with you being gay. I think being a protected class, a protected minority, would help keep you from being discriminated against, and that affects you opening your business, running your business, or any of that.”
Hill read through the policies and noticed LGBTQ businesses weren’t highlighted like other minority groups were. That caused him to start thinking as both a business owner and as president of the Equality Chamber of Commerce, where he felt this protected status would allow for a broader sense of community within the LGBTQ business community.
“One thing that definitely made sense to me was this connection to organizations like the National LGBT Chamber of Commerce and if there is a way to encourage more of LGBTQ owned businesses to join groups,” Hill said. “There’s so many people who don’t even know that this group exists, but that that is a key to giving those groups access to broader contracts. You know a lot more in terms of supplier diversity and really bringing money directly into the LGBTQ community.”
When asked if they believe Harris’s “Entrepreneurs and Innovators Policy Plan” would directly help them as an LGBTQ-owned business, each person emphatically said yes.
“I think so many people would benefit from this, and the people that we care so much about,” Hill finished. “It’s the American dream, Right? Finding something that you’re excited or passionate about and starting your own business. Everyone should have that opportunity.”
Source: Washington Blade: LGBTQ News, Politics, LGBTQ Rights, Gay News – www.washingtonblade.com
