With the federal courts ruling that Pennsylvania's ban on same-sex marriages is unconstitutional, the time has come for LGBT couples to begin considering the importance of financial planning. Despite such historic gains, many LGBT couples continue to face challenges, including small business owners.
Statistics regarding LGBT entrepreneurship remain scarce; however, LGBT business owners often struggle with many of the same challenges as other business owners. When combined with the entrepreneurial challenges that are unique to the LGBT community, the importance of financial planning becomes even more crucial.
One of the most common challenges faced by LBGT business owners is that they are not part of what is frequently termed as the 'good ole boy network.'. Equality issues are certainly not new to members of the LGBT community, but when it comes to entrepreneurs, lack of access to a small business loan can make or break a business. When this is the case, it becomes imperative for LGBT business owners to seek out alternative financing.
One way in which LGBT couples can overcome this challenge is by taking advantage of networks that are geared specifically toward their unique issues. StartOut, for example, offers a lesbian entrepreneur mentoring program that works to pair new lesbian entrepreneurs with experienced business owners and senior level executives. As a result, new entrepreneurs are able to take advantage of a vast array of resources, knowledge, and advice to help them in growing their new businesses. In addition, mentors in the program are typically other lesbian entrepreneurs who have an in-depth understanding of the unique challenges faced by members of the LGBT community.
It is also important for LGBT couples to understand the impact that their credit scores can have on their ability to be approved for a small business loan. Bad credit can result in higher interest rates and even prevent you from being approved for a loan. For that reason, it is critical that you make a point of disclosing your credit history to one another early in a relationship. If one partner in the relationship has excellent credit and the other partner's credit is not so great, this can have an effect on how you apply for loans moving forward. Just as with straight couples, a LGBT couple's credit scores will not be combined when they get married or form a domestic partnership, but the ability to achieve joint financial goals, including applying for a small business loan, can still be affected by a spouse's credit score.
Additionally, it is important to pay careful attention to join accounts. Regardless of whether it is a small business loan or a credit card, missed payments on joint accounts can create negative marks on both spouses' or partners' credit scores. Even if one person handles paying the bills, it is still important for the other spouse to be aware of what is taking place with payments.
While most straight couples take for granted the financial benefits offered by a legal marriage, those same benefits are not afforded to LGBT couples. In fact, there are approximately 1,100 rights, protections, and benefits that are immediately conferred upon legally married couples at the federal level. Such rights include inheritance of jointly owned real estate. This can prove to be particularly important for LGBT small business owners who need to take into consideration what will happen with a small business in the event of the death of one spouse or partner. Tax matters can also become complicated when a state requires registered domestic partners to divide their income for the purposes of state income taxes but are required by the federal government to file taxes separately.
Working with a financial planner and an attorney experienced in handling the unique issues and challenges faced by LGBT couples can prove to be vital. All couples can benefit from a durable power of attorney, basic will, living will, healthcare proxy, and irrevocable trust, but for LGBT small business owners, those documents can be even more crucial.