Are you someone looking to start your business journey by setting up an LLC in Nebraska? Then you are at the right place!
Nebraska is known as the State of Small Business. The State’s affordable cost of living, elite universities, ongoing professional culture, and welcoming people assist small company entrepreneurs in growing better and making more profits.
However, the procedure for forming an LLC in the State may seem confusing. This article will guide you through the entire process.
Name your Nebraska LLC
Before registering your LLC, you need to select a name for your company. The name you choose for your business is extremely important as it is the identity of your company in the market. As a result, the title should be distinctive, attractive, and something that is easy for the customers to remember.
But you cannot decide on a name solely on these criteria. The State of Nebraska has certain rules for naming your LLC. The name you select should follow all the guidelines.
Section 21-108 of the Nebraska Revised Statutes lays down the guidelines for naming an LLC.
The name of your LLC should be followed by the phrases’ limited liability company’ or ‘limited company’, or its abbreviations “L.L.C., LLC, L.C., or LC.”. The words limited and company may be abbreviated as “Ltd.” and “Co.” respectively.
The name you select should not be the same or deceptively similar to any existing names registered with the State. In other words, the name should not be taken up by any entity authorized to transact business in the State. For example, let us assume that an LLC exists by the name of Simon’s swift horses LLC. In that case, you cannot apply for a name like Simon and swift horses, LLC, as this would be deceptively similar. Another example is Adidas, LLC and Adidaas, LLC.
You cannot use any words that give the impression of your business being a state entity. For example, you cannot use words like “FBI”, “State Department”, etc.
Similarly, usage of certain words, like “Bank” or “University,” is restricted and involves obtaining the written consent of concerned authorities and additional paperwork and compliance requirements. Using words like “attorney” will also be required to have a concerned licensed professional of the field as a member of your LLC.
To know more, you can read the Nebraska Secretary of State’s Name Procedure.
Does Your Business Require a DBA?
A DBA (“Doing Business As”) allows a company to operate under a different name than its official name. For example, the original name of the Puma company is Ruda, after its creator, Rudolf Dassler. In Nebraska, a DBA name is called Trade Name.
A trade name should not be similar to any name already registered in the State’s records. A trade name is best used for the purpose of branding.
It comes in handy when you want to expand your business, and the present name of your company does not suit the new area or the product that you are taking up.
But remember that trade name alone does not protect your personal assets. To avail of the protection of limited liability, you need to form an LLC.
You have to file for a trade name with the office of the Secretary of State. After the registration is complete, the law requires you to publish a legal notice in a local newspaper that has circulation in the primary location of your business or your county. The details should be the same as mentioned in the application.
The newspaper company will provide you with an affidavit of publication. You will be required to file it with the State within 45 days of the registration of the name. This can be done either online or via mail. There is no fee applicable.
Once registered, the trade name is valid for a period of ten years. Thereafter, you have to renew the registration by obtaining a renewal form from the State and filing it via mail. The fee is $100. There is also a provision to amend your DBA name by duly filing the Application to Amend the Trade Name Registration by paying $30.
Doing a Name Search
You should do a name search to determine if the name you’ve selected is distinct from other names that have previously been registered. Ensure you properly check the name chosen for your LLC to avoid rejection later. You can use Nebraska’s corporate and business name search portal.
After deciding on a name, you can apply to the office of the Secretary of State and reserve it for 120 days. This facility helps you plan out your LLC’s set-up. If you need more time than 120 days, you can re-register. There is also an option to renew your reservation.
Reserve Your Name by MailDownload Form
Secretary of State
P.O. Box 94608
Lincoln, Nebraska 68509-4608
Registering your business domain
Business domain means a website URL for your LLC. Launching a website at the initial stages of your business might not be something at the top of your to-do list.
However, once your business gets going, you might want to take it online to expand it further. But then, it might be too late as the most suitable domain might have already been taken up. So before you select a name for your LLC, it is recommended that you ensure that the domain name you need is available and that you register it for your use.
You can check currently available domain names.
Choose a Resident Agent in Nebraska
A registered agent is an individual or business entity in charge of receiving essential legal papers at the behest of your LLC. Consider your registered agent to be your company’s point of contact with the State.
The registered agent shall also receive any process service concerning a lawsuit against your company. Laws in Nebraska require you to appoint a registered agent before your LLC can start functioning.
Who Can Be a Registered Agent?
§21-233 lays down the eligibility requirements of a registered agent in the State. You can nominate any one of the following as your registered agent:
- An individual who is a resident of the State of Nebraska and has a business office identical to the registered office.
- Any domestic or other eligible business entity with a business office identical to the registered office.
- Any foreign corporation that is authorized to transact business in the State.
In the case of an individual, a registered agent must be at least 18 years of age. This means you can appoint your friend or family member, a member of the LLC, or even yourself as the registered agent. Alternatively, you can nominate a registered agent service.
Individual v. Commercial Registered Agent Service?
Any individual can be appointed as an agent as long as they have a physical address in Nevada and are a legal resident of that State.
As a registered agent, the individual must be available seven days a week during business hours to accept and sign any notices or legal documents that the State sends to your LLC.
The job of a registered agent requires much diligence, and even a tiny inadvertence can cause you a significant loss and might discount your public image.
Therefore, it is always advisable to hire a professional registered agent service for this purpose. The registered agent’s address is available for the public to access on the concerned websites.
So if you work out of your home or a private office, having a professional registered agent service will help you maintain privacy. Also, professional help lets you focus your energy and time on core business areas.
File the Certificate of Organization with Nebraska
The Certificate of Organization is a legal document needed to form and legally incorporate your LLC officially. It is to be filed with the office of the Secretary of State. Once this is completed, your LLC is registered and is recognized in the eyes of the law.
Unlike other states, Nebraska does not provide a standard Certificate of Organization form. You will have to draft one yourself, adhering to the guidelines issued under Section 21-117 of the Nebraska Revised Statutes.
You must include the following details in the certificate:
- Entity Name and Address
- Agent for Service of Process Information
- Effective Date
- Details of the Organizer and the Organizer’s signature
- Additional PLLC Information (if applicable)
You have to file the Certificate of Organization with the office of the Secretary of State either using the online platform or via mail.
As of now, the State does not have any provisions pertaining to expedient processing of your Certificate of Organization.
Publish the Notice of Formation
Nebraska laws require you to make a publication known as the Notice of Organization for a period of three consecutive weeks. The publication should be done in a newspaper having circulation in the county where the registered office of the LLC is located. It should include the following details:
- The name of the LLC
- The street address of the designated office
- The nature of the LLC’s business
Once this is done, you will receive an affidavit of publication from the newspaper company. This affidavit is proof of completion of the publication requirements. This affidavit is to be filed with the Secretary of State.
File Affidavit Online with the State of NebraskaFile online
Fees vary depending on the newspaper you publish with.
Create the Operating Agreement for your Nebraska LLC
An operating agreement is a legal document that sets out the terms of management of the LLC. It also provides a framework concerning the duties of members of the LLC and its managers. It acts as a guiding force in matters of the day-to-day functioning of the LLC.
In a multi-member LLC, disputes about the amount of capital invested, voting, profit and loss sharing, etc., might arise. This is common, especially when there is no clarity on the company’s internal affairs. An operating agreement will help you avoid such problems. The State of Nebraska does not mandate it, but it is highly recommended that you have an operating agreement.
There are no prescribed templates for an operating agreement in Nebraska, and you may draft one according to the needs of your business. However, irrespective of the nature of your business, it shall be advisable for your operating agreement to cover the following matters:
- Organization Details
- Duties of Members and Managers
- Management and Voting
- Capital Contributions
- Division of Profit and Losses
- Bookkeeping Procedures
- Procedure for adding new members
- Requirements concerning Meetings and Procedures thereof
Writing The Operating Agreement Yourself vs. Hiring a Service
There are no specific requirements in drafting an operating agreement, so you are at liberty to prepare one yourself after consulting with the other members of the LLC. Alternatively, you can hire a professional to do this for you. Experts in the laws of Nebraska, these professionals will help you draft an operating agreement that suits the needs specific to your business model.
Limits of Operating Agreement
Though there is no fixed format for an operating agreement; however, there are certain restrictions on what can be included. The operating agreement should not be against the law. If your LLC does not have an operating agreement or if it does not provide for a specific matter, the Nebraska Uniform Limited Liability Company Act shall, by default, apply to your LLC. This law is generic in its application and might not always be in your LLC’s best interest. As a result, it is usually a good idea to have an operating agreement for your LLC.
Obtaining an EIN for your Nebraska LLC
EIN refers to an Employer identification number. The Internal Revenue Service (IRS) provides a unique identifier to a business entity. EIN is required for every company if they want to hire employees. It is a nine-digit number that the IRS uses to identify your company for tax purposes. You can think of it as the Social Security Number of your Company.
You will need an EIN to create a business bank account, apply for business permits, and file your tax returns as a business owner. The IRS issues an EIN, and you can apply for it online or through the mail.
File Biennial Reports in Nebraska
All LLCs operating in the State must file a Biennial Report with the Secretary of the State. As per Section 21-125 of the Nebraska Revised Statutes, the report must be filed every two years. It does not require the LLC’s financial records. It will be filed every odd year between 1 January and 1 April. The following details are to be included in the report:
- Name of the LLC.
- Street address of the LLC’s designated office.
- Name and street address of the Registered Agent.
- Street address of the LLC’s principal office.
The first report is to be filed in the next odd-numbered year. So, for example, if you registered your LLC in 2021, you will file your first report in 2023, and then 2025, and so on. If there is an error in the report, the office of the Secretary of State will notify you.
If the correction is filed within 30 days of the correction notice, the report is deemed to be submitted on time. If you miss the deadline for filing the report, your business may risk getting shut down by the State. The filing fee is $10. There is an additional $3 credit card fee, also. You can make amendments to the report at any time. You can file the report online.
Tax liability for your Nebraska LLC
The way your LLC will be taxed depends upon the number of members in your LLC. There are four ways in which LLC will be taxed:
- Sole-proprietorship: a business owned by a single person
- Partnership: a business owned by multiple people
- C – Corporation: income is split or segregated for taxation
- S – Corporation: tax liability is split between the business and its owners
Federal Tax Liability
Your federal income tax liability is the amount you owe to the Federal Government. You must pay a Federal self-employment tax (presently 15.3%) on the profits you take from your LLC. Additionally, you need to pay Federal Income Tax. The income tax you have to pay will vary depending on your income, filing status, deductions, etc. However, federal corporate taxes must be paid if you treat your LLC as a corporation for tax purposes.
The Internal Revenue Service or the IRS collects federal taxes from business entities in the USA. For this purpose, it provides an EIN to every entity. In the case of an LLC, it can be charged in three ways: as a Partnership, as a Corporation, and as an individual.
If you’re a single-member LLC, your default taxation type will be that of a sole proprietor or ‘disregarded entity’. The LLC has to report its activities under Schedule C, Schedule E and/or Schedule F of Form 1040.
If your LLC has more than one member, it will be taxed as a ‘partnership’ by default. In this case, apart from filing Form 1040, you’ll have to file your partnership return in Form 1065 and provide information in K-1 of each partner.
State Tax Liability
In Nebraska, if your LLC is engaged in selling certain specified products, you will have to register for a seller’s permit. A seller’s permit allows you to charge sales tax from the consumers.
The sale of physical property like furniture, home appliances, and motor vehicles is subject to sales tax. Medicines, groceries, and gasoline are exempt from sales tax. You can know more about the State Sales Tax regime by visiting the State’s Department of Revenue website. You can apply for a seller’s permit without paying any application fee. The best part is that the permit never expires.
If your firm collects sales tax of less than $75 per month, you should file the sale tax return annually. You should file the return quarterly if you collect tax between $75 and $250 per month, and the return should be filed monthly for collection of amounts above $250 per month.
For annual filing, the deadline is 22nd January of the year following. For monthly filing, the due date is the 20th or the next business day from the 20th of the following month. The deadlines for quarterly filings are 20th April, 20th July, 22nd October, and 22nd January for the previous quarters, respectively.
In cases of late filing, the state charges a 10% penalty on the amount of tax to be paid or $25, whichever is greater. A 10% penalty is set on the unpaid amount or $25, whichever is greater.
This happens when the filing has taken place on time, but the appropriate amount of tax has not been paid. Additionally, compound interest of 9% is applicable per year on the unpaid tax.
If your business purchases goods for resale, you don’t have to pay any sales tax. However, for this purpose, you must obtain a reseller’s permit. You go through the instruction part of the Nebraska Resale or Exempt Sale Certificate to know more.
Additionally, if you’re an employer, you will need to register for Unemployment Insurance Tax with the Department of Labor and Industrial Relations. You will also need to register for Employee Withholding Tax on behalf of your employees.
Permits and Licenses
Depending on the nature of your business, you might be required to register for federal, state, or local permits.
Federal Licensing requirements will depend on the business activity carried on by your LLC. If your company is engaged in any area of business regulated by the Federal Government, you will be required to obtain relevant Federal Licenses and Permits.
Some business activities requiring Federal Licenses and Permits are:
- Alcoholic beverages
- Firearms, ammunition and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics
At the State level, you will be required to obtain a seller’s permit if you plan on selling any product or service subject to sales tax. You can get a seller’s permit by visiting the State’s Department of Revenue website. Additionally, certain professions are required to have specific licenses.
Depending on where you operate your business, you may also be required to get the local government’s license and permit. In Lincoln, businesses carrying out certain specified professions are required to have a specific city license. To know more about local licensing requirements, get in touch with the office of your town or county government.
For more information, visit:
Business Bank Account & Phone Number
In conducting business, you will be required to make many transactions. You will also have personal commitments, and you will be making transactions for the same as well. Now, if you have a single account for business and personal usage, there will be no distinction between these transactions.
You might risk getting your personal assets in trouble as the court might attach them to make you pay the LLC’s liabilities. Therefore, it is always advisable to have a separate account for the LLC. This also helps in tax assessment purposes.
A contact number related to your company is called a business phone number. A business phone number can be handled by any member or a person appointed for this purpose.
Like keeping a separate business account, you should keep a different business phone number to avoid disturbances in your personal life.
Nebraska is a great choice for you to set up your LLC. The State has a low cost of living compared to other parts of the country. It also offers programs like the Nebraska Progress Loan Fund (NPLF) and the Angel Sidecar Fund, which assist the growth and expansion of small and medium-sized enterprises.
Get in touch with your local county or city government office to determine if your LLC qualifies for any of these incentives.
Once you complete the steps discussed in this article, your LLC is legally incorporated. However, if you feel overwhelmed by the procedural nuances, you can always hire a professional service to help you set up your LLC at reasonable costs.
We wish you and your business the very best!