How to Start an LLC in Nebraska? (8 Steps to Success)
Nebraska state law allows limited liability companies to be formed under the Nebraska Limited Liability Company Act.
If you're looking to start an LLC in Nebraska but are unsure of where to begin or what the process entails, this blog post will walk you through the process and answer all of your questions.
I've spent the last ten years engaged in the world of business formation.
We have assembled a collection of tried-and-true approaches with the help of a hand-selected team of legal experts and attorneys to make sure your journey is as easy as possible.
Quick Summary
- To start an LLC in Nebraska you will first have to cover mandatory steps, such as choosing an LLC name, having an agent of service, and filing a Certificate of Organization with the State of Nebraska.
- To manage a Nebraska LLC smoothly, ensure you have a registered agent to handle court filings and official correspondence on your behalf. Remember, the agent must possess a physical address in the state.
- It is advised to keep personal and corporate finances separate, create a separate bank account for the LLC, and think about purchasing business insurance for security.
Steps to Forming an LLC in Nebraska
Before your LLC can be recognized as a legal business entity, there are a few steps you have to take to transact business in the state.
1. Choose a Nebraska LLC name
An LLC must have a unique name that is not currently in use by any other business registered in the state. The name you choose for your LLC must also comply with Nebraska's naming requirements.
An LLC name must include the words "limited liability company" or the abbreviation "LLC."
The LLC name can't contain words that could mislead the public into thinking the company is authorized to provide professional service it's not.
Any words that are linked to a government agency or department cannot be used in an LLC name either.
To make sure your Nebraska LLC name is available, you can search the state's business database. If the business name you want to use is already taken, you'll need to choose a different one [1].
It is essential to check LLC availability in Nebraska before filing any other documents. If your desired name turns out to be taken, your application will be rejected.
You can also reserve a business name by filing a reservation form with the Nebraska Secretary of State Corporate Division.
This will reserve your LLC name for up to 120 days. The form must be filed by mail or fax, and the filing fee is $15.
Reserving an LLC name does not create the business; it only prevents another company from using the name.
You still have to complete all other forms required for LLC formation in Nebraska before you can transact business under that name.
See our article if you need to change an LLC name in Nebraska.
2. Hire a Nebraska Registered Agent
Registered agent service is required in Nebraska to keep your LLC in good standing.
They are professional services responsible for receiving and handling legal, and tax notices on behalf of the company and forwarding them to the appropriate individuals.
By using a professional registered agent service, your company can save time and money by not worrying about confusing legal notices or falling behind with Nebraska LLC annual reports and other legal requirements.
Registered agent services in Nebraska can also be a valuable asset for business owners who are not located in the state of Nebraska, as they will have someone on-call to handle any legal issues that may come up with your LLC.
Your agent must be a permanent resident of Nebraska, be available during regular business hours, have a physical street address in the state, and be authorized to do business in Nebraska.
3. File Nebraska LLC Certificate of Organization
Before you can conduct professional services legally, you have to file the Nebraska LLC Certificate of Organization with the Nebraska Secretary of State. This document is also known as the Articles of Organization or Certificate of Formation.
The Nebraska Certificate of Organization must include:
- Your company's name and business address
- The purpose of your business (e.g., to engage in retail sales, real estate investment, etc.)
- Names and addresses of initial managers and members
- Effective date (must be at least 30 days after the certificate has been filed)
- Registered agent information
The filing fee for the Certificate of Organization online applications is $100. You can pay by credit card, check, or cashier's check payable to the "Nebraska Secretary of State."
If you want to file by mail, the filing fee is $110.
Although most states offer a downloadable form for the certificate, Nebraska does not.
That means business owners will have to create their own Certificate of Organization according to the instructions specified in Nebraska Statute 21-117 [2].
4. Draft Your LLC Operating Agreement
Operating agreements are important for all types of businesses, but they are essential legal documents if you choose to make your business an LLC.
It applies especially when your LLC provides professional services.
LLC operating agreements can vary widely in terms of length and detail depending on the preferences of the owners. However, it is recommended that every new member receives a copy of the operating agreement.
An LLC operating agreement should include the following:
- The rights and responsibilities of each member (owner)
- How decisions will be made in terms of management, voting rights, and day-to-day operation
- What happens if there is a dispute between members or owners
- The amount, if any, that each member must contribute to the LLC
- How profits and losses are allocated among members
Operating agreements don't have to be filed with the Nebraska Secretary of State, unlike the Certificate of Organization.
The operating agreement will serve as an internal agreement between the members of your LLC and is not open to public inspection.
However, it's a good idea to have all members sign the operating agreement so everyone is on the same page.
5. Publish a Notice of Organization
Every LLC must publish a Notice of Organization after filing the LLC's Certificate of Organization for three weeks in a row.
The LLC Act does not specify where this notice must be published, but it is common for companies to place their notices in major newspapers with wide circulation in the municipality or county where the LLC's principal office is.
This notice simply announces that your LLC now exists as an official business entity and provides a place for LLC members to sign the notice.
The next step is to wait until you receive an affidavit of publication from the newspaper. Once you receive the affidavit, file it with the Nebraska Secretary of State. The cost of an affidavit varies depending on the newspaper you choose.
6. Open a Business Bank Account
A business bank account is a necessity for any business. It helps you keep your finances organized and makes it easy to track your expenses and income.
When you open an LLC business bank account, make sure to ask the bank about their merchant services.
This will allow you to process credit card payments from customers.
LLC owners should separate their personal and business expenses.
This will help maintain a corporate veil and avoid commingling of funds. Keep in mind that you should never use your business credit card to pay for your personal bills.
When choosing a bank for your busines bank account, make sure to compare interest rates and fees. You also want to find a bank that offers business checking and savings accounts with no minimum balance requirements and no monthly service fees. Some banks also offer free online banking and bill pay services.
Before you can open a business bank account, you will have to obtain a federal tax identification number (employer identification number).
7. Obtain an EIN
An employer identification number (IRS employer identification number) is also known as a federal tax identification number. It is used by the Internal Revenue Service (IRS) to identify taxpayers who are required to file various business tax returns.
You will need an EIN for an LLC if you have employees or plan to hire employees, operate as a partnership, are subject to backup withholding, have an estate or trust, and are required to file excise, employment, and alcohol, tobacco, and firearms tax returns.
You can apply for an EIN through the Internal Revenue Service website free of charge.
8. Obtain Business Licenses and Permits
The sales tax permit also called a seller's permit, is the only state-level authorization or license in Nebraska that is required for LLCs.
The permit allows the sale of tangible personal property and some services in Nebraska.
To obtain a permit, an LLC must complete an application form and submit it to the Nebraska Department of Revenue.
There is no fee associated with obtaining or renewing this permit.
Other business licenses and permits may vary depending on the type of your limited liability company, especially if you plan to provide professional service.
For instance, if your LLC was organized to provide accounting or tax services, you would also need to obtain a public accountant's certificate.
Before beginning the process of obtaining business licenses and permits in Nebraska for an LLC, all necessary forms must be complete with accurate information.
This will ensure the approval process moves more smoothly through Nebraska state agencies. It will also provide greater protection from possible financial liabilities and legal issues in the future.
What Are the Benefits of Nebraska LLCs?
A Nebraska LLC offers a variety of benefits, including:
- Limited liability protection for the business owners
- Ease of formation and operation
- Flexibility in management and ownership structures
- Tax advantages (if operated correctly)
- Business expenses are paid with pre-tax dollars
However, it is important to note that not all these benefits are guaranteed. This requires the LLC owners and managers to take special precautions for them to be effective.
For example, suppose you fail to keep your business expenses separate from personal ones or pay yourself a salary on par with what an average worker would receive in exchange for your labor. In that case, you may lose the ability to claim tax deductions.
Under business law, an LLC is a separate legal entity from its owners.
This means that the business's debts and liabilities are not the responsibility of the individual members.
In addition, LLCs offer limited liability protection to their owners in case the company is sued. This protection extends to the personal assets of the owners, such as their home, car, and bank accounts.
What Are the Downsides of Nebraska LLCs?
Some downsides of Nebraska LLCs include extra reports, higher formation fees, and even the possibility of increased taxation.
Most businesses choose to form an LLC because of the many benefits it offers. However, there are a few downsides to consider before making your decision.
The main downside is the LLC cost in Nebraska. There is a filing fee of $100, and you will also need to pay annual LLC taxes in Nebraska. In addition, you must maintain a registered agent in the state.
If you are not familiar with business law, it is important to consult with an attorney before forming an LLC in Nebraska. Certain requirements must be met before your LLC becomes valid, and failure to comply can result in serious consequences.
It is also important to note that getting an LLC is not the same as registering your business name. You must register your company with the Secretary of State, and it will be included on public registries for anyone looking to check out its status.
Nebraska LLC Tax Filing Requirements
A single-member LLC has the default tax status of a sole proprietorship. That means the LLC owner reports business income and expenses on their federal tax return.
The LLC owner is also responsible for federal self-employment taxes. A multi-member LLC has a default tax status of a partnership.
That means the LLC owners report their share of the business income and expenses on their personal federal tax returns. Each member is also responsible for federal self-employment taxes based on their share of the LLC profits.
On top of that, an LLC can choose to be taxed as a corporation (S or C Corp).
LLCs in Nebraska must file a Certificate of Organization with the Secretary of State. The tax implications are complex, so it's best to consult a tax professional for more information.
Nebraska LLCs are required to collect sales tax on taxable sales within the state. The current statewide rate is six percent.
The LLC charges sales tax to customers and remits it to the state Department of Revenue. Some items, such as food and prescription drugs, are exempt from sales tax. Refer to Sales Tax Exemptions for a complete list.
Aside from filing a Certificate of Organization, the LLC must pay local taxes, which vary by city and county. Contact your local tax authority for more details.
Related Articles:
- How to Close an LLC in Nebraska
- Premium LLC Filing Services in Nebraska
- How Long Does It Take to Register an LLC in Nebraska
What is a Nebraska LLC?
A Nebraska LLC is formed under the Nebraska Limited Liability Company Act that provides limited liability protection to its members, shielding them from personal liability in lawsuits or bankruptcy.
It requires at least one member and becomes a multi-member LLC with two members, classified as a partnership.
The personal and business assets of the LLC members are separate from one another.
The personal assets of the members are protected from business debts, and any assets of the LLC are separate from those of the members.
The owners of an LLC can be individuals, partnerships, or other corporations.
There are a few different types of businesses that can benefit from setting up as an LLC:
- Professional service, including doctors and lawyers.
- Financial institutions.
- Real estate investment trusts (REITs) or real estate development companies.
- Businesses that deal in a lot of inventory, such as manufacturers or wholesalers.
- Any business that wants to limit its personal liability exposure.
Nebraska LLC FAQs
How Do I Find Out if a Business Name Is Taken in Nebraska?
To find out if a business name is taken in Nebraska, you will have to check with the Business Services Division, of the Nebraska Secretary of State.
How do I add a DBA to an LLC?
To add a DBA to an LLC, file a DBA registration form on the Nebraska SOS website with a $10 fee.
How Do I Register a Foreign LLC?
To register a foreign LLC, file the Application for Certificate of Authority Foreign Limited Liability Company form, appoint a registered agent, and pay a $120 filing fee.
Does Nebraska Require an Operating Agreement For an LLC?
Nebraska does not require an operating agreement for an LLC, but it is advisable to have one to prevent conflicts among members and establish clear guidelines for business operations.
What Kind of Business Insurance Does a Nebraska LLC Need?
A Nebraska LLC typically needs general liability insurance to cover customer injuries and professional liability insurance for professional services.
Additionally, a separate policy is recommended to protect the LLC's assets from owner, officer, or manager negligence or wrongful acts.
Start an LLC in Nebraska
Starting an LLC is a straightforward process, but it can seem overwhelming to business owners who are new to this type of structure.
Still, even those with little experience in LLC formation can have a smooth process if they opt to consult professionals and get to work with a business formation service that has rich experience and knowledge.
To be sure you're making the right decision for your company and that you've done all the necessary research beforehand, consult with a tax professional or seek professional help from a company like ZenBusiness before moving forward.
References:
- https://sos.nebraska.gov/business-services/name-procedures
- https://sos.nebraska.gov/business-services/select-limited-liability-company-statutes
