A Nebraska limited liability company (LLC) is a business entity that provides the limited liability features of incorporation (protection from legal responsibility for wrongful acts) while still enjoying many of the operational benefits and tax efficiencies available to partnerships.
Nebraska provides one of the more flexible state structures for LLCs, allowing new companies to select their own management structure, distribution policy, an operating agreement.
The only required provisions are contained in the filing instructions (Articles of Organization), which includes information about who will manage/represent the company; an address; at least one member; whether managers or members control member decisions; how profits will be allocated among members; and how an LLC fee will be treated.
Starting a Nebraska LLC today is easy
STEP 1: Name your Nebraska LLC.
The first thing that you will need to do before LLC formation is to select a business name. The name must be distinguishable from other registered names and cannot include words such as “bank,” “trust,” etc.
Although the name of your LLC may not contain any of these restricted words or terms, it does not mean that it’s available for use. Each state has certain designated reserved names which are protected against unauthorized use by registration with the Secretary of State within three weeks after its application.
The easiest way to check availability is to search online at http://sos.nebraska.gov/business_services/corporations/.
FAQ: Naming a Nebraska LLC
Q. How do I find out if my LLC has been approved for use?
A. When the Secretary of State approves your Nebraska LLC, they will email you the approval notice and incorporate documents within one business day of receiving your filing fee.
The Secretary of State’s searchable online database available at http://sos.nebraska.gov/business_services/corporations helps to determine whether a fictitious name or address is available in Nebraska prior to incurring any costs associated with it.
Q. What are reserved names?
A. Reserved names are those that have been designated as off-limits by the state because they are already in use by another company or individual entity or may cause confusion with an existing registered name(s).
For example, the state has designated names such as “The State of Nebraska,” “The United States,” and those that include the word “bank” as reserved and off-limits for use by any legal business entity.
STEP 2: Choose a Nebraska Registered Agent Service.
Next, you will need to choose a person or business entity in Nebraska who will represent your LLC and receive legal documents on its behalf. A registered agent is paid by the LLC to accept important legal papers if your LLC is sued or needs to be served with any other legal document. Some attorneys also act as registered agents.
You can either hire an individual or entity (i.e., Non-lawyer Attorney), verify that they are not already acting as the registered agent for another company in Nebraska, and check their availability through the Secretary of State’s online database at http://sos.nebraska.gov/business_services/corporations/.
FAQ: Nominating a Registered Agent
Q. Can anyone be a registered agent?
A. All that is required is to be 18 years of age and an individual or domestic business entity (i.e., Non-lawyer Attorney) in good standing with the State of Nebraska. There are several companies now offering this service, such as LegalZoom at http://www.legalzoom.com/. You can also be your own registered agent.
Q. What happens if my registered agent changes address?
A. You will need to notify the Secretary of State within thirty days of any change in your registered agent’s address, either by filing an amendment to your articles of organization or by sending them written notice by mail with confirmation receipt requested proving that it was sent and received correctly through the U.S Postal Service to:
Secretary of State
301 Centennial Mall South
Lincoln, NE 68509-4986
STEP 3: File the Nebraska LLC Certificate of Organization.
The next step is to file the initial articles of organization with the Secretary of State. Articles must include your LLC’s name, a physical street address for registered agents, and a purpose clause that establishes what your LLC will do or not do in Nebraska. You can use this form to file online or download a blank version.
FAQ: Filing Nebraska LLC Documents
Q. How much does it cost to file an LLC?
A. The filing fee for your articles of organization is $100 unless you are registering as a foreign LLC (i.e., registered in another state), in which case the fee is $250.
Q. How long does it take to file my Nebraska LLC?
A. Your Secretary of State will email you the approval notice usually within one business day after receiving your filing fee and papers but can take up to fifteen calendar days if they need to send them out for review by the Attorney General’s office or other state agencies such as the Department of Revenue.
It can sometimes be helpful to call their office directly at (402) 471-2555 before filing on the status of your LLC with your Secretary of State. They will also email you the original articles along with a certified copy if you pay an additional $20 for each copy requested at the time that they mail out your approval notice.
STEP 4: Complete Nebraska LLC Publication Requirements
On the same day that the Secretary of State issues your LLC certificate, they will also send you a letter requiring your Nebraska LLC to submit an additional publication fee within 30 days after issuance and proof of publication in an official newspaper for six consecutive weeks. The authorized agent can pay this fee online.
All LLC’s must complete this step even if they already published their notice back in step one when filing Articles of Organization or if there was no mention of it on their initial filing form, although some state websites like Ohio and North Dakota only require publication upon request by the new company and not at the time of filing (see Table A below).
Nebraska has had a fairly good reputation over the years, but it is always best to be safe than sorry and follow all requirements as outlined by your Secretary of State.
STEP 5: Create a Nebraska LLC Operating Agreement
Another important step that many new LLC owners often overlook is to create a formal written Nebraska LLC Operating Agreement. This is your contract with the members of your LLC, and it should be prepared even if it’s only one member.
Having a written agreement will help you avoid unnecessary problems from arising in the future. Your operating agreements can be as informal as a simple word document or as complex as an entire book explaining what happens in every situation possible between all members of your LLC.
FAQ: Creating a Nebraska LLC Operating Agreement
Q.What information should be included in my Nebraska LLC Operating Agreement?
A. Here are some suggestions for topics to cover:
- The rights and duties of each member, including how he/she can join your LLC;
- How the members will receive money or take it out;
- How you will buy or sell real estate held by your company;
- Appointment of managers and whether they must be members as well; Raising new capital, allocation of profits and losses, management, transferability of interests, dissolution, expulsion, or withdrawal of a member.
Q. How long does an LLC exist?
A. It’s up to the members to decide on an “end date,” so technically, no one can ever close down your company unless all of its members agree to dissolve it.
In most states like California and Nebraska, however, companies are subject to mandatory dissolution if they fail to file annual reports or pay franchise taxes which can be pretty pricy in some states such as Delaware even though their standard LLC fee is only $300 per year.
Your LLC must also meet all annual requirements outlined by your Secretary of State, such as publishing a notice in a local newspaper once a year, providing an annual report to the state justifying why your company should still exist, and paying any LLC fees or taxes.
STEP 6: Get an EIN
For most small business owners, the only time you’ll need to get an Employer Identification Number (EIN) is if your Nebraska LLC has employees or you are opening a business bank account for your company. Without this identification number, no bank in their right mind will allow you to open up a checking account, and it makes filing taxes more difficult as well.
You can obtain your Federal Identification Number online at the Internal Revenue Service (IRS) website by clicking here: http://www.irs.gov/smallbiz.
FAQ: Getting a Nebraska LLC EIN
Q.Do I need an EIN for my Nebraska LLC?
A.Yes, the only time you won’t need an EIN is if your LLC has no employees and is not opening a bank account for your company. If both of these are true, then you can use your social security number as your business identifier on all tax documents.
Q. How do I get an EIN for my new Nebraska LLC?
A. The process is fairly simple and can be done online at www.irs.gov by clicking here: http://www.irs.gov/businesses/small/article/0,,id=98350,00.html. You will need to have a Federal Tax ID number before you can apply for any accounts, so keep that in mind if you plan to open up a bank account later on.
Benefits and Drawbacks of an LLC in Nebraska
- Owners are afforded “pass-through” taxation meaning that taxes are only paid on the individual level rather than at both the corporate and personal levels.
- Members of an LLC do not have to be US citizens.
- Personal assets are protected in most cases from business debts or claims against the company.
- Members of an LLC can easily transfer their interests to other parties without much legal hassle.
- Most states do not require public reporting for limited liability companies, which makes it easier to remain anonymous in some cases.
- It is much more expensive than forming a Sole Proprietorship or Partnership in most states (aside from Wyoming).
- You must include the LLC name when filing taxes, purchasing licenses, and paying fees where applicable. This means you will have to publish its name somewhere if you plan to conduct business under a different alias (i.e., John Doe d/b/a JTD Company).
How much does it cost to start a Nebraska LLC?
You can form an LLC in Nebraska for as little as $99 plus filing fees. You’ll have to pay the initial fee of about $125 for your Articles of Organization with the Secretary of State, but you can include extra names for free.
The total cost will come down if you are only forming the company without any members or designated managers since all it requires is your social security number. If you plan on adding multiple members, however, expect to pay around $175 per person depending on how many people are involved.
Separate Your Personal and Business Assets
Once you’ve started your business, make sure to keep them separate. This means opening up a checking account in the name of your LLC only and paying yourself a salary before distributing profits if you are the sole owner. If you are bringing on other members, then each person will have to pay their share of the annual fee when filing an annual report with the state.
1. Opening a business checking account:
If you do not have a business already set up, it is typically easiest to open a checking account first. This will give you the EIN for your new LLC. If you are planning on using another bank other than where you intend to open your checking account, be sure to contact that company regarding the necessary steps that need to be taken in order for them to recognize this new business as an account holder.
2. Getting a business credit card:
In most cases, your credit card company will not want to set up a business account unless you have been in business for at least a year. In these cases, it is more beneficial to apply as an individual and then, later on, add the LLC as another user on the account. This way, your personal assets are protected from any liabilities of the LLC.
3. Hiring a business accountant:
You should hire an accountant to set up your books and provide you with advice moving forward. It is often easier for a CPA to take on one client at a time, so hiring someone who already has a full clientele can be beneficial.
At least initially, it may be helpful to meet with the CPA only periodically, as little as once a month or even quarterly. This way, they can keep tabs on how your business is growing but not overwhelm you with too much information at once.
Get Business Insurance for Your Nebraska LLC
A business owner will have to protect her or his business from a variety of risks. The best way to do this is by getting insurance quotes and choosing the right coverage for your situation. If you already have homeowner’s or renter’s insurance, it might be a good idea to add on business and personal liability insurance before going out and getting new coverage for your LLC.
Depending on where you plan on operating your company, you might need different forms of commercial auto insurance, health insurance, and even workers’ compensation insurance.
1) Worker’s Compensation Insurance:
Employees must be protected from work-related accidents and injuries. Nebraska is one of the few states that does not require employers to carry workers’ compensation insurance or no-fault insurance, but it’s still a great idea to protect your employees (and your business) by getting this type of coverage.
2) General Liability Insurance:
This type of insurance will help protect your business from third-party injury claims on your property. Depending on the size and scope of your company, you might need to get different types of coverage for products and completed operations as well. Talk to your agent about what your exact needs are so you can ensure that you have the right amount of protection available to you.
3) Umbrella Liability Insurance:
Your general liability policy only covers up to a certain dollar amount per claim which is one reason why umbrella insurance exists.
This kind of coverage can come into play when multiple events or accidents exceed the high watermark set by your other policies, for example, if three or more people were injured in an accident or several defective products caused damage at various places. Umbrella insurance will help cover this type of claim.
Nebraska LLC Business Permits and Licenses
If you are starting a business in Nebraska, the state requires that you have one year of business tax filing history. If your business is brand new, you will need to register your company with the Secretary of State before doing anything else. After this initial step, you can begin working on any other necessary permits or licenses that your business needs to succeed.
If your business is operating from a commercial location, you may need to get a zoning permit from your city. This is also where researching what kinds of businesses can operate in specific areas can pay off. For example, a home-based business might not require a zoning permit, while a retail shop could.
Depending on the nature of your business and its products or services, you might have to register with other state agencies, such as the Nebraska Department of Health and Human Services, for daycare providers or medical practices. In addition, some types of businesses are regulated by local counties, so check with your local government office to find out what kind(s) of licenses or permits you’ll need before opening up shop.
Nebraska LLC Tax Filing Requirements
Any business with employees must collect and remit both federal and state unemployment insurance taxes. If you’re a freelancer or small business owner, then the only thing that you’ll need to worry about is how much of your income goes toward self-employment taxes, which is set at 15.3%.
In addition to federal corporate income tax, LLC owners may also have some personal income tax filing requirements as well. However, these rules vary from one owner to another as some members might be able to file as a corporation instead of as an individual while others will be responsible for their own schedules C, D, and E.
Your best bet is to contact a qualified accountant or financial planner who can help you determine exactly how your company’s finances should be categorized based on your unique situation.
Nebraska Sales Tax
Every business that sells taxable items or services within the state must collect a sales tax from its customers. The rate is currently 5.5%, and all of this money goes to the Nebraska Department of Revenue, except for 1/4 cent, which is reserved for local municipalities.
If you have any questions about providing a resale exemption certificate, withholding taxes, or quarterly payments, be sure to ask your Nebraska taxation agency about the best course of action based on your specific situation.
As far as what types of products are subject to tax on sales, that will depend on whether they are classified as groceries (taxable), clothing (usually exempt), medical devices (generally nontaxable), and telecommunications services (subject to a 4% gross receipts surcharge). You can read more about Nebraska’s tax laws on their Department of Revenue website.
Nevada Employer Taxes
If you have employees, you’ll need to register with the Employment Security Division of the Nevada Department of Employment, Training & Rehabilitation. Generally, employers are required to provide workman’s compensation insurance and must contribute one percent of each employee’s earned wages up to $1,200 per year.
You may also have to pay unemployment taxes in certain situations. To learn more about what is taxable in these cases, please refer to their FAQ page for details.
Every business that meets its sales tax obligations is entitled to a sales tax license from the state, which they can apply for online through the Nevada Department of Taxation website.
Federal LLC Tax Filing Requirements
All businesses, regardless of whether they have employees or not, are required to pay federal corporate income tax on their profits. LLCs with two or more members must report their finances using Form 1065, which is a detailed version of the one-page Schedules C and D found in the 1040 form.
If you own a sole proprietorship or single-member LLC, then your options are either to file as a corporation or use Schedule C for self-employment taxes.
Nevada resident owners who wish to incorporate will be considered a “C” Corporation while those who choose an LLC will be taxed in one of three ways:
- The owner can pay themselves a salary from company funds (in which case they would owe 15.3% Social Security and Medicare contributions)
- They could receive a 10% owner’s distribution every year after the first $250,000 in profits have been made
- They can elect to have their company taxed as an “S” Corporation, which means profits/losses will be passed through.
File Your Nebraska LLC Biennial Report
All LLCs registered in the state of Nebraska are required to file an annual report (due on or before March 1st of each odd-numbered year) along with a filing fee of $25. However, if you do not wish to operate your business in the state after this initial period has expired, then you will need to cancel your registration by filing form NCLR-1.
FAQ: Hiring Employees in Nebraska
Q. If I hire an employee, am I required to give them benefits?
A. No. According to the Nebraska Department of Labor, employers are not required to provide employees with health insurance or other fringe benefits as long as they meet the minimum wage requirements found under Nebraska law for hourly, nonexempt workers.
Q. Will my employees need to sign any forms or agreements before beginning work?
A. It depends on what type of employment you’re looking for and if it will be full-time or part-time. For instance, if you plan to hire employees who will work an average of 30 hours per week (and you’ll be providing at least $1,000 in compensation), then they should probably sign a contract before starting their job.
How to Build Business Credit?
Building a business credit history is a necessary first step if you plan on securing capital from a bank or other lender.
When applying for a loan, your ability to repay the debt will depend on your financial strength and stability, as evidenced by your credit score. Credit scores range from 300-850 and are determined by reviewing five key factors:
- Payment History (35%) – Have you missed any payments? This includes credit cards, retail accounts, mortgages, car loans/leases, etc. Your record of making payments on time will be scrutinized, so it’s important that you don’t miss any! Make sure to pay off all outstanding debts and continue paying even after you’ve applied for a new line of credit.
- AmountsOwed (30%) – Lenders are concerned that you have too much debt because if you are unable to repay it, then they will have to take additional steps to collect. This means paying additional fees and interest, which eats away at their initial loan amount, so be sure your debts don’t exceed 50% of your credit limit.
- Length of Credit History (15%) – If you have had a short credit history or have just started building one, this factor won’t help your score much. The older the record gets, the better off you’ll be, as it demonstrates that you’re able to manage credit well since lenders will typically extend more credit as time goes on.
- New Credit Inquiries (10%) – Every time you apply for a new line of credit and they pull your report to run a background check, this is considered a “hard inquiry.” The more hard inquiries you have, the greater the impact on your score. This is why if you’re shopping around for loans, it’s best not to apply everywhere immediately, as this clutters your record with too many requests.
- Types of Credit (10%) – Is your credit made up of installment loans like mortgages or car loans? Or revolving debt such as credit cards? Lenders prefer that you have a mix of both since one type won’t provide an extensive history.
Once you’ve compiled all these factors and determined where you fall on the spectrum, look into options for building business credit. This will make it much easier to secure a loan or line of credit when the time comes.
How to Obtain a Certificate of Good Standing in Nebraska?
The first step towards starting your business is making sure you have the necessary licenses and certifications. Most states require businesses to maintain a Certificate of Good Standing in order to continue doing business within their borders, so if you are planning to set up an office, it’s important that this form is filed right away.
- A Certificate of Good Standing confirms the legal status of your company, meaning there are no pending actions or lawsuits against it.
- It’s used by companies who need to prove their standing with other parties such as potential landlords, banks, vendors, etc., and can be obtained from the Nebraska Secretary Of State Office by filing form SOS-101.
- Keep in mind that obtaining this certificate does not mean your business is officially registered with the state – only verifies that your business is in good standing.
- To file for a Certificate of Good Standing, you will need an official form which costs $25 to access plus the cost of postage or appointment fees. You can request this form by visiting the SOS website at http://sos.nebraska.gov/Business/Business%20Pages/Certificate%20of%20Good%20Standing–SOS-1011.html, filling it out, and mailing in with payment to do so in person or via fax.
- The filing fee must be paid in full before they will process your request (accepted forms of payment are cash, check, credit card, money order, and traveler’s checks ).
Nebraska is a rather simple state to form an LLC. While there are several steps that you need to follow, these are generally straightforward and involve answering questions about your business on standard forms. These forms only need to be filed with the Secretary of State’s office once unless you decide to make changes later on down the line.