How to Start a Business in Nebraska

Here's an overview of the key steps you'll need to take to start your own business in Nebraska.

1. Choose a Business Idea

Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.

After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see why you need to write a business plan.

2. Decide on a Legal Structure

The most common legal structures for a small business are:

• sole proprietorship
• partnership
• limited liability company (LLC), and
• corporation.

There also are special versions of some of these structures, such as limited partnerships and S corporations. You'll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.

3. Choose a Name

For LLCs and corporations, you'll need to check that your name is distinguishable from the names of other business entities already on file with the Nebraska Secretary of State (SOS). You can check for available names by doing a search on the SOS website. You can reserve an available name for twelve months by filing an Application for Reservation of Name with the Nebraska SOS (there are separate forms for LLCs and corporations). You can reserve a name for up to 120 days. There are also certain name requirements for LLCs and corporations (like including a word such as "LLC" for LLCs or "Company" for corporations). See our articles on how to form an LLC in Nebraska and how to form a corporation for more information.

Sole proprietorships and partnerships in Nebraska have the option to file a Trade Name Application with the Nebraska SOS if they use a business name that is different from the name of the business owner (for a sole proprietorship) or individual partners (for a partnership). Trade names expire after ten years.

If you plan on doing business online, you might want to register your business name as a domain name. In addition, to avoid trademark infringement issues, you should do a federal and state trademark search to make sure the name you want to use is not the same as or too similar to a name already in use.

4. Create Your Business Entity

• Sole proprietorship: To establish a sole proprietorship in Nebraska, you don't need to file any organizational documents with the state.
• Partnership: To create a general partnership in Nebraska, you don't need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners. To form a limited liability partnership (often used by professionals), you must file a Statement of Qualification with the Nebraska SOS.
• LLCs: To create an LLC in Nebraska, you must file a Certificate of Organization with the Nebraska SOS. You can file the certificate online; no paper form is available. You'll also need to appoint a registered agent in Nebraska for service of process. In addition, while not required by law, you also should prepare an operating agreement to establish the basic rules about how your LLC will operate. The operating agreement isn't filed with the state.
• Corporations: To create a corporation in Nebraska, you must file Articles of Incorporation with the Nebraska SOS. You can file the articles online; no paper form is available. You will also need to appoint a registered agent in Nebraska for service of process. Although not legally required, you also should prepare bylaws to establish your corporation's internal operating rules. Bylaws are not filed with the state. S Corporations must also file IRS Form 2553, Election by a Small Business Corporation, with the IRS.

5. Apply for Licenses and Permits

Tax Registration. If you'll be selling goods in Nebraska, you must register with the Nebraska Department of Revenue (DOR) for a sales tax permit. If you'll have employees in Nebraska, you must register with the DOR for employer withholding tax. For both types of registration, you can use Form 20, Nebraska Tax Application.

EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business's name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.

Regulatory licenses and permits. These cover areas such as:

• health and safety
• the environment
• building and construction; and
• specific industries or services.

For regulatory licenses and permits issued by the state, check the state's Business Licensing Resources section. For information about local licenses and permits, check the websites for any cities or counties where you will do business.

Professional and occupational licenses. These cover people who work in various fields. In many cases, you can get the basic licensing information by going to the Professions & Occupations section of the Nebraska Department of Health and Human Services (DHHS) website. For professions not listed on the DHHS website, such as doctors, lawyers, accountants, architects, and engineers, you'll need to check the website for the state regulatory board for your profession (for example, the Nebraska Board of Engineers and Architects).

6. Pick a Business Location and Check Zoning

You'll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.

It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.

One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.

7. File and Report Taxes

Nebraska taxes every kind of business.

Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 1040N).

Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, some partnerships also must file Form 1065N, Nebraska Return of Partnership Income.

LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC must file a biennial report with the Nebraska SOS in odd-numbered years. Nebraska LLCs taxed as corporations must also file a state corporation tax return. See Nebraska LLC Annual Report and Tax Requirements for more information.

Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation is subject to Nebraska corporation taxes. Finally, corporations must file a biennial report with the Nebraska SOS in even-numbered years. The reporting requirement includes paying a corporate occupation tax.

If you have employees, you must also deal with state employer taxes, such as wage withholding requirements.

And, apart from Nebraska taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.

8. Obtain Insurance

Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage.

9. Open a Business Bank Account

No matter the type of business you form, you should consider opening a separate business bank account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection.