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From the bustling cities of Omaha and Lincoln to its quaint farm towns, Nebraska is a dynamic landscape from which to launch and run your small business. One option for establishing your business in Nebraska is the limited liability company (LLC), a form of business entity that offers a variety of advantages alongside certain complexities to consider. This article will guide you through the steps needed in order to successfully set up your LLC in Nebraska.
How to start an LLC in Nebraska
- Name your Nebraska LLC
- Create a business plan
- Get a federal employer identification number (EIN)
- Choose a registered agent in Nebraska
- File for your Nebraska LLC Certificate of Organization
- Obtain Nebraska business licenses and permits
- Understand Nebraska tax requirements
- Prepare an LLC operating agreement
- Examine business insurance options in Nebraska
- Understand financial considerations
- Market your LLC
What is an LLC?
A limited liability company (LLC) is a common form of business entity favored by entrepreneurs across the United States. Its popularity is due in large part to the legal protections and tax treatment afforded LLC ownership. These benefits include:
- Separation of personal and business assets. Owners of LLCs, known as “members,” are usually not held personally responsible for the LLC’s business debts. Instead, liability for those debts lies within the LLC itself. As such, members are effectively insulated from damages that might arise from most legal claims against the LLC.
- Pass-through taxation. The second main benefit of running your Nebraska small business as an LLC is how it is taxed. LLCs enjoy “pass-through” tax status. This means LLC profits are taxed a single time on members’ personal income tax returns at their personal tax bracket. LLCs also usually avoid corporate taxes on business income—unless members elect for the business to be taxed as an S corporation.
Is an LLC right for you?
The LLC isn’t the only business structure available to Nebraska small business owners. Instead, you might choose to form your business as a sole proprietorship or corporation. To determine whether the LLC is the right business formation for you, consider the following:
- Do you have personal assets in need of protection? Your LLC can shield all or most of your personal assets from debtors and litigants. Only the business’s assets are potentially up for grabs.
- Are you looking to limit your tax liability? LLCs generally do not pay taxes on corporate income—that is, income that isn’t distributed to members. They are generally classified as pass-through entities, meaning they are subject to one round of taxation at members’ personal income levels. Traditional corporations are often subject to so-called “double taxation,” which entails both corporate taxes on income generated by the business and income tax on the money owners earn from it.
1. Name your Nebraska LLC
Choosing a name for your LLC is one of the first important decisions you’ll make as a small business owner in Nebraska. It forms the basis of your brand recognition and identity. A solid LLC name will effectively communicate your business’s function and mission in a way that is pithy, distinct, and memorable. There are also specific rules to naming your business in Nebraska that you must follow:
- Your LLC name must contain certain words. The name of your Nebraska LLC must contain the words “Limited Liability Company” or “Limited Company,” or an abbreviation thereof (“L.L.C.,” “LLC,” “L.C.,” or “LC”). “Limited” may be abbreviated to “Ltd.,” and “Company,” may be shortened to “Co.”
- Your LLC name must be distinct. The name of your Nebraska LLC must be different from any other business name currently registered with the state authorities. You can run a search of existing businesses in the state through the Nebraska Secretary of State’s website to see if your desired name is available.
2. Create a business plan
Writing a business plan is an essential part of developing any business—small or large—in Nebraska or elsewhere. A good business plan can help you zero in on estimated startup costs and assess your business’s capacity for overhead. It can also indicate whether you might need to make adjustments to your goals or profit expectations, and possibly seek out further funding to bring your vision to fruition. On that note, business plans can also help investors evaluate the potential profitability of your business before agreeing to invest in it.
A workable business plan should include your LLC’s name and a brief description of its business function. It should also contain a thorough market analysis, an outline of the management structure, target customer profiles, and marketing, logistic, and financial plans.
3. Get a federal employer identification number (EIN)
A federal employer identification number (EIN) is a federal tax identifier—a nine-digit number assigned to businesses by the US Internal Revenue Service (IRS) to track tax obligations. It functions a bit like a Social Security number for your business. You’ll need an EIN to register your LLC with state authorities in Nebraska, and you can obtain one online through the IRS website, free of charge.
4. Choose a registered agent in Nebraska
All businesses in the state, including LLCs, are required by Nebraska law to appoint a registered agent. A registered agent is an individual or business entity (known as a registered agent service) that is authorized to accept legal documents and other official correspondence on behalf of your LLC. You can appoint a member or employee of your LLC to this role, or you can contract with a third-party individual or service. Registered agents, including individuals, must be available during normal business hours at a physical, in-state address (PO boxes don’t count).
5. File for your Nebraska LLC Certificate of Organization
You formally create an LLC in Nebraska by filing a Certificate of Organization with the Secretary of State’s office. The certificate may be filed by mail or uploaded via the Secretary of State’s online portal and should, at a minimum, include:
- The LLC’s name and business mailing address
- Registered agent information (name and business address)
- The services that members, managers, and/or employees are licensed or legally authorized to perform, in the case that the LLC renders a professional service, such as accounting or legal services
The filing fee to submit your Certificate of Organization in Nebraska is $100 plus $5 per page recording fee (so keep your paperwork brief). Every other year after, you'll also need to file a biennial report.
6. Obtain Nebraska business licenses and permits
There is no general statewide business license required in Nebraska, but depending on your LLC’s line of business and where it is principally located, you may need to obtain other local, state, or occupational licenses. Check with the clerk for the municipality where your primary place of business is located (or the county government, if it is in an unincorporated area). For state and occupational requirements, consult the state’s Business Licensing online resource guide.
7. Understand Nebraska tax requirements
There are a number of taxes your LLC may be subject to if you choose to form the business in Nebraska. They will largely depend on where your business is located and what kind of business it engages in. Taxes may include:
- Income tax. Members of your LLC will need to pay both state and federal income tax (quarterly) on any money they earn from the LLC. Nebraska’s state income tax rate ranges from 2.46% to 6.84%; the federal income tax rate ranges from 10% to 37%.
- Corporate tax. Unless your LLC elects to be taxed as an S corp, it will not be subject to corporate taxes at either the state or federal level—both paid on a quarterly basis. Should you opt to be taxed as an S corp, you will be subject to a tax of $5,580 plus 7.5% of all income in excess of $100,000 in Nebraska. As an S corp you will be charged federal taxes of 21% on your income.
- Sales tax. If your LLC engages in the sale of products or services that would ordinarily be subject to sales tax, you must register with the Nebraska Department of Revenue and pay a 5.5% sales tax on all transactions on a monthly basis.
- Special taxes. If your LLC sells certain restricted items, like liquor, cigarettes, or insurance, your business will be subject to additional taxes on individual sales transactions (or monthly premiums).
8. Prepare a Nebraska LLC operating agreement
Operating agreements are internal documents that outline how businesses run both day-to-day and in the long term. You are not required by state or federal business law to have one, but they can still provide helpful guidance for your operations, accountability, and goal-setting. An operating agreement typically includes:
- Your LLC’s business name and street address
- How long you plan to run the LLC (perhaps indefinitely)
- Information on the LLC’s registered agent
- Information about the Certificate of Organization
- The business’s purpose and mission statement
- An organizational chart listing members and their respective investments
- How profits and losses are divided between LLC owners
- The process for admitting new members and offboarding outgoing ones
- An overall management plan
- Various indemnification and liability provisions
9. Examine business insurance options in Nebraska
Unexpected losses can be devastating for any small business—including those in Nebraska. While LLCs offer a degree of asset protection by virtue of limited liability status, you may still want to purchase insurance to protect your business’s non-covered assets. Standard policies available in Nebraska include:
- Workers’ compensation. Most Nebraska businesses with employees are required to purchase workers’ comp—an insurance package covering injuries or illnesses workers may suffer on the job. Businesses that only employ family members are exempt from the workers’ comp requirement.
- General liability insurance. General liability insurance provides broad, general coverage for your business, guarding against losses that might occur due to lawsuits from accidents, injuries, or negligence connected to the LLC.
- Commercial property insurance. Commercial property insurance covers some or all of the costs associated with repairing or replacing lost, stolen, or damaged property of the LLC.
- Professional liability insurance. Professional liability insurance protects businesses that provide certain specialized professional services. These are usually in fields with high expectations for expertise, like law, accounting, or real estate. This insurance is also known as malpractice insurance.
The Small Business Administration maintains a list of forms of insurance your Nebraska LLC may need.
10. Understand financial considerations
Insurance is one part of the picture when it comes to LLC startup funding. Other costs at this stage might include renting office, storage, or retail space, commissioning a professionally designed website, or paying for advertising, equipment, and/or software. You may also want to hire certain experts, like lawyers, accountants, or other professionals to support business operations. Because these costs can add up, you may be interested in accessible funding options, like Shopify Capital, which lets you repay funding as a percent of your Nebraska LLC’s daily sales. This allows payments to fluctuate according to how much money you’re making. You may also consider opening a business bank account and obtaining a business credit card to handle cash flow and overhead.
11. Market your LLC
Once your new Nebraska business is up and running, it’s time to market it. Marketing your LLC allows you to reach consumers and hopefully turn them into repeat customers. A good marketing plan for your Nebraska LLC includes elements like:
- Market research. Understanding your LLC’s place in the Nebraska business ecosystem is key. You can accomplish this by thoroughly researching things like customer profiles, competitor products and/or services, and industry trends.
- Advertising and promotion. Although traditional paid advertising may seem a little outdated, it can still be a highly effective way to generate new business. You can design and place ads by yourself in a local newspaper or on a billboard, for example, or hire an advertising agency to do this for you.
- Social media. Any successful business today needs to maintain a robust online presence across all major social media platforms. These might include Facebook, Instagram, TikTok, Twitter, YouTube, and more. Consistently publishing content that aligns with your brand can garner more visibility and customer engagement. Tracking what platforms are popular with what audiences can be the key to unlocking your business’s potential reach.
- Public relations. Developing strong relationships with press outlets in Nebraska and even with national and foreign press can bring wide, credible notice to your LLC.
- Customer retention. Building genuine relationships with customers is one way to turn them into repeat customers. You might do this by leveraging your marketing materials, digital tools, and social media presence to forge authentic connections.
Starting an LLC in Nebraska FAQ
How much does it cost to form an LLC in Nebraska?
Starting an LLC in Nebraska costs, at a minimum, $100 plus $5 per page to file your Certificate of Organization with the Secretary of State’s office.
Do you need a Nebraska registered agent for your LLC?
Yes, all Nebraska LLCs must appoint a registered agent or registered agent service to receive legal documents and other official correspondence on their behalf. Remember, your registered agent must have a physical, in-state street address—a PO box won’t cut it.
How do LLC state taxes work in Nebraska?
Members of LLCs in Nebraska pay both state and federal income taxes on money they earn from the business. They are also subject to sales tax if they sell retail products or services or certain restricted goods and services. Unless your LLC elects to be taxed as an S corp, you won’t have to pay corporate taxes.