How To Form An LLC In Nebraska
Nebraska is a highly competitive business state. Starting a business in Nebraska is challenging but comes with its perks. Due to Nebraska’s business-friendly financial incentives and ease of availability of resources as well as workforce, it was ranked by The Business Facilities magazine among the top 10 states due to the optimal business atmosphere it provides.
If you are looking for ways to form an LLC in Nebraska, you’ve come to the right place. This guide compiles all the essential information you need to successfully prepare to form an LLC in Nebraska without any hassles.
What Is An LLC?
An LLC (aka a Limited Liability Company) is a form of a business structure solely in the USA which shields its owners from personal responsibilities of taxes, debts, and liabilities. They must be distinguished from a corporation and a partnership or sole proprietorship.
This forms the basis that an LLC combines the features of the two and aids start-ups and small to medium-sized businesses in achieving the benefits of their larger counterparts while following a relatively more straightforward rulebook.
Below, we briefly list down a few of the many reasons why Nebraska is one of the best states in the United States to start an LLC.
Advantages Of Forming An LLC In Nebraska
Are you looking to start a business in the great state of Nebraska? If so, forming an LLC is one of the best things you can do. An LLC offers entrepreneurs and small business owners several distinct advantages. Let’s discuss some of the major benefits of starting an LLC in Nebraska.
Limited personal liability
The limited liability protection an LLC business structure provides can be quite advantageous to an LLC owner in Nebraska. This indicates that, in the event of an accident, creditors may file a lawsuit against the LLC but not the owner or investors personally.
The state’s generous financial incentives would greatly benefit new businesses in Nebraska, especially start-up businesses such as LLCs. Healthy tax, finance, and economic development agencies are available in Nebraska, and they offer several incentive programs to help new firms get off the ground.
The resources they promise vary from learning how to start or do business in Nebraska to benefiting from the state and county’s funds, grants, and incentives offered. Two programs that offer similar assistance to start-up businesses are the Nebraska Progress Loan Fund (NPLF) and the Angel Sidecar Fund.
Business resources and workforce
The accessibility of resources and workforce that comes with opening any business, let alone an LLC in Nebraska, is unmatched by any other state in the US. With it being a highly business-friendly state, it serves as an excellent employment-friendly state as well.
Transportation and logistics
Nebraska has a rich transportation and logistics network that efficiently navigates all modes of transit. From interstate highways to railways, airways, and even waterways, Nebraska is very well disposed of in the conveyance department making business setups favorable in the region.
Flexible profit distribution
The advantage of registering a new company in Nebraska as an LLC is that you can decide how to distribute income and profits in various ways.
Disadvantages Of Incorporating An LLC In Nebraska
Nothing comes without cons. The few disadvantages of incorporating an LLC in Nebraska in no way outweigh the benefits that come with it, but they should not go undiscussed.
Like any other state, starting an LLC in Nebraska is usually not as cost-friendly as it is to form and maintain a sole proprietorship or general partnership. Similarly, as with other states, one needs a registered agent to form an LLC in Nebraska which comes with its added cost. In addition, for incorporating and registering an LLC in Nebraska, taxes have to be paid to both the State and Federal Governments.
Moreover, as an LLC owner, one has to pay state tax on earnings drawn by the LLC. The usual income tax rate in Nebraska ranges from 2.46% to 6.84%, depending on the amount you earn via your LLC. Many states also impose ongoing fees, such as annual reports and/or franchise tax fees; however, such is not the case with Nebraska.
Transfer of ownership in an LLC is complicated in every state, including Nebraska. The way LLC business ownership is to be transferred is spelled out in the LLC Articles of Organization. In an LLC in Nebraska, all the members of the LLC must unanimously decide on adding new members or changing the ownership. This is generally easier with corporations, who hold this benefit over LLCs.
How To Form An LLC In Nebraska
Here are the steps you need to take to form an LLC in Nebraska:
- Choose a unique name for your business
- Choose a registered agent in Nebraska
- File a Certificate of Organization
- File an Affidavit of Publication
- Receive a Certificate from the state
- Make an Operating Agreement
- Obtain an EIN
- File biennial report
Choose a unique name for your business
To start an LLC in Nebraska, select a name for your business by following the State’s naming requirements, which include:
- Including “Limited Liability Company” or the abbreviated form “L.L.C” or “LLC” in your LLC name. This rule falls under Nebraska law and is of utmost importance.
- Choosing an LLC name that is unique and distinguishable from other existing businesses. The Nebraska Secretary of State’s business name database can be used to determine whether the names are available.
- Nebraska “DBA” (short for doing business as) is an assumed name that the business uses in its dealings, which differs from the LLC’s registered legal name in the Articles of Organization. An Application for Registration of a Trade Name must be filed with the Nebraska Secretary of State to register such an assumed name or trade name, which may be used in place of the LLC’s legal name. Online or by mail, the application can be submitted. About $100 is required to file.
- In case of second thoughts or uncertainty in finalizing the official name, you can reserve your LLC name beforehand to prevent it from being taken. In Nebraska, a form is submitted to the state authority, allowing you to reserve your name for up to 120 days.
Choose a registered agent in Nebraska
The State of Nebraska requires an LLC owner to hire a registered agent. This person or business is responsible for receiving and managing legal and official documents on the LLC’s behalf. Furthermore, the said individual must reside in any business organization in Nebraska. They also should have a physical street address in Nebraska where they should be present on-site during business hours to receive official documents.
File a Certificate of Organization
The next step is to file a Certificate of Organization. This must be filed with the Nebraska Secretary of State. A Certificate of Organisation, also known as the Articles of Organization, contains basic information about your LLC and its members and managers and helps officially establish it. It should have the following:
- The name of the LLC and its address
- The registered agent’s name and residing address
- A reason why the LLC was formed
- Professional services offered by the LLC (if any)
- Names and addresses of members, managers, and professional employees associated with the LLC
- The person forming the LLC is required to sign the certificate.
The certificate, which is filed at a rate of $100 worth an additional $5 per page, is either sent online by uploading a signed pdf or via postal mail. Following your filing, the Secretary of State will review it, and once approved, your LLC becomes a legal organization.
File an Affidavit of Publication
In Nebraska, publishing a notice of the formation of a new business entity is an essential requirement. The notice of publication must be published within 45 days of the LLC’s formation and run for three consecutive weeks in one newspaper.
The notice must include the LLC’s name and address, the registered agent’s name and address, and the professional services offered by the LLC (if any). After three weeks, the newspaper sends an Affidavit Of Publication to the LLC, which is supposed to be filed with the Secretary of State.
Receive a Certificate from the state
Once the LLC’s incorporation documentation is approved, the owner of the LLC will be issued a certificate formally confirming the existence of the LLC either via post or online. This certificate enables the LLC to get an EIN, business bank account, and licenses.
Make an Operating Agreement
This document mentions the LLC members’ and employees’ roles. It forms the basic operating structure of your business and helps define the business’s purpose. It is entirely internal and does not need to be submitted to the Secretary of State.
Although Nebraska doesn’t require an LLC to file an Operating Agreement, it is an important document for your business’ smooth running and helps in various future legal matters. The following things should be included in the Nebraska Operating Agreement:
- The name, address, and duration of your LLC
- The registered agent’s identification and residing address
- The Certificate of Organization’s information
- Business purpose
- Members’ names and their contributions
- The procedure of losses and profits division
- The way new members will be added
- The LLC’s management
- Compensation for losses and damages
Obtain an EIN
A nine-digit EIN (Employer Identification Number) is a tax identification figure provided to the LLC by the IRS (Internal Revenue Service) if it has more than one member and/or has employees. An EIN helps the LLC handle different taxes, open business bank accounts, and hire employees. An EIN is obtained by filling out an online application on the IRS’s official website.
File biennial report
All LLCs operating in Nebraska must file a biennial report every two years before April 1st. The report can be filed either online or by mail.
Types of LLC
Which type of LLC is ideal for me?
In Iowa, you can choose from the following types of LLCs:
- Single-Member LLC: This is an LLC with only one owner (also called a “member”). It’s perfect for small businesses or solo entrepreneurs who want to keep their personal assets separate from their business assets. This type of LLC is easier to manage because there’s just one person making decisions and handling the company’s affairs.
- Multi-Member LLC: As the name suggests, a multi-member LLC has two or more members. This is a good choice for businesses with multiple owners or partners. Each member has a percentage of ownership in the company, and the operating agreement typically outlines how the company will be managed and how profits and losses will be allocated among the members.
- Member-Managed LLC: This type of LLC is managed directly by its members. All members have the authority to make decisions and handle the day-to-day operations of the business. This is a common choice for small businesses where the owners are actively involved in the company’s operations.
- Manager-Managed LLC: In a manager-managed LLC, one or more designated managers are responsible for making decisions and handling the day-to-day operations. The managers can be members of the LLC or external individuals appointed by the members. This is suitable for businesses where the owners prefer to delegate management responsibilities to someone else.
- Professional LLC (PLLC): A PLLC is a type of LLC designed specifically for licensed professionals, such as doctors, lawyers, architects, or accountants. It’s similar to a regular LLC, but with some additional requirements to comply with professional licensing boards.
- Series LLC: A series LLC is a unique type of LLC that allows for the creation of separate “series” within a single entity. Each series can have its own assets, liabilities, and management structure, providing additional flexibility and protection. This type of LLC is not very common and may not be suitable for all businesses.
When setting up an LLC in Iowa, you’ll need to file the required paperwork with the Iowa Secretary of State, pay the filing fee, and create an operating agreement outlining the company’s structure and management.
Applicable LLC Taxes In Nebraska
The owner of the LLC has to pay through their earnings while representing their LLC. Furthermore, all the employees working under the LLC must also pay Nebraska State Income Tax. As mentioned earlier, the State Tax rate in Nebraska ranges from 2.46% to 6.48%, depending upon the LLC’s earnings.
Nebraska’s State Sales & Use tax rate is 5.5%. Goods falling under the heading of basic necessities are exempted from taxation.
All members and managers earning through an LLC are liable to pay the Federal Self-Employment Tax. Nebraska’s Federal Self-Employment Tax rate is 15.3%.
The federal income tax rate also applies to the LLC’s earnings. It varies depending on your earnings, the industry your LLC is in, the applicable income tax bracket at the time, any applicable deductions, and your filing status. The Federal Income Tax only applies to profits, allowances, and deductions such as retirement and healthcare plans.
All LLC employees must collect and hold the payroll tax when collecting their pay. Additionally, each employee is required to submit a personal tax return. If necessary, even the employer might have to cover employee insurance costs.
How Much Does An LLC Cost In Nebraska?
Please note that the costs listed below are general estimates and may vary depending on your specific circumstances. Additionally, there may be other costs associated with starting your LLC, such as obtaining necessary licenses or permits, which will vary depending on the nature of your business.
It is always a good idea to consult with a professional advisor or attorney to ensure you have accounted for all costs associated with forming an LLC in Nebraska.
State Filing Fee
Registered Agent Fee
Operating Agreement Preparation
Business Name Reservation (optional)
EIN (Employer Identification Number)
Annual Report Fee
Is LLC The Best Entity For Me?
Maybe, LLC isn’t the right entity for you. Maybe it is a C-Corp. Only way to find out is to directly compare them all.
LLC vs Corporation (C-Corp)
Sole proprietorships and Limited Liability Companies (LLCs) are two of the most common business entities for individuals and small businesses. Learn what differentiates the two today.
LLC vs S-Corp
Not sure what business structure to choose? Learn about the key differences between LLC and S-Corp today.
LLC vs Sole Proprietorship
The primary difference is that an LLC provides limited liability protection for its owners, while a sole proprietorship does not.
Frequently Asked Questions About Starting An LLC In Nebraska
Here are the most commonly asked questions about forming an LLC business in the state of Nebraska:
Establishing and maintaining an LLC in Nebraska is expensive but comparatively less than in some other states. Even if one decides to start their business without professional help, filing state letters and certificates and obtaining licenses and permits in addition to state and federal taxes makes it costly to start and maintain an LLC in Nebraska. The total cost to form an LLC in Nebraska lies around $500.
In Nebraska, There are two main state taxes that an LLC has to pay to the Nebraska Department of Revenue: The State Income Tax and the State Sales and Use Tax. In addition, Federal Income Tax must also be paid by an operating LLC in Nebraska.
The filing fee for forming an LLC in Nebraska is $100.
After submitting the applications, the duration to get an LLC approved in Nebraska ranges from a few days to up to 4 weeks.
The Owner of the LLC is required to hire a registered agent for their LLC to receive and manage legal documents. The registered agent must be a resident of Nebraska or a business entity operating in Nebraska with a physical street address and must be available during business hours to receive the said documents. However, one can also be their own registered agent, but it is not recommended.