If you’re reading this article then it’s a safe bet that you’ve either made the decision to form an LLC, or you want more information about forming an LLC in Nebraska before you decide. Congratulations! The decision to form an LLC is an importante one, and you’ll likely remember this for the rest of your life.
I’ll walk you through all the steps you need to complete in order to start a Limited Liability Company (LLC) in Nebraska, but first I’ll go over some LLC basics, like what a Limited Liability Company is and some of the advantages of forming an LLC.
(If you want to skip to the ‘how to form an LLC’ section, click here)
What Is A Nebraska LLC?
A Nebraska LLC is a Limited Liability Company formed in the state of Nebraska that is governed by the laws, regulations, and statutes of the state of Nebraska.
Why Choose An LLC?
There are lots of advantages to forming an LLC and I’m sure you’ll find many more than I’ve listed here. Here are the most common reasons that small business owners choose to form a Limited Liability Company rather than choosing another business entity, like a sole proprietorship.
1. Limited Liability And Asset Protection
One of the most cited advantages of forming an LLC is the limited liability and personal asset protection that come from forming an LLC. An LLC owner isn’t personally responsible for the financial debt and legal responsibilities of their Nebraska LLC.
What does that mean? It’s a little complicated, but basically when you form an LLC the Nebraska Secretary of State acknowledges the difference between you and your business entity. Therefore, nobody can list things like your house, the funds in your personal bank account, or your car if they want to sue your LLC as a way to repay your LLC’s debts.
Americans have seen our share of calamity over the past few years, and it’s become quite evident that unexpected events and natural disasters can topple even the most prepared and successful businesses overnight. And our economy fluctuates so much that no business is guaranteed safety all the time.
Many small business owners love the protection that comes from owning a Nebraska LLC. Limited Liability and personal asset protection mean that even if you should encounter legal or financial issues in the future and you have to close your business, you’ll still have your personal finances and assets, so you won’t lose everything.
Another advantage of owning an LLC in Nebraska is the option to protect your personal information when you form an LLC.
If you choose another business structure such as a sole trader, then you’ll be required to register pieces of your personal information with the Nebraska Secretary of State. Then the information is listed on the Secretary of State’s website which makes it a matter of public record that anyone can access.
The problem with listing your personal information publicly is that hackers and scammers are so skilled at their craft these days. With a few clicks they can steal your identity using information you’d typically find unimportant (like your name and address), rack up thousands of dollars in debt using your name, and disappear before you even know it happened. This is quite terrifying for most business owners because the business world is so heavily dominated by technology.
But when you form an LLC, you have the option to keep your information from being listed on the public record.
All you have to do is hire an LLC formation service. A good Nebraska LLC service will not only list their own information with the Nebraska Secretary of State to protect your own information and help you avoid identity theft, they will also help you obtain and file all the documents necessary to not only form your LLC but also maintain its legal good standing status with the Nebraska Secretary of State.
The third most popular reason to form an LLC is the tax benefits that LLCs are awarded.
There’s a major difference between how a Nebraska LLC is taxed and the taxation of a corporation in Nebraska. If you own a corporation, your business will be subject to something called “double taxation”. Here’s how “double taxation” works:
A corporation’s profits are first taxed at corporate rates before being given to corporate shareholders as dividends. Dividends are taxed when they are received, which means that a corporation’s profits are taxed twice before corporate shareholders even get their hands on them, thus the term “double taxation”.
You avoid “double taxation” entirely when you form an LLC in Nebraska, however. An LLC’s profits are taxed at company rates, which aren’t as high as corporate rates, before being paid out to LLC members in the form of personal income. Of course LLC members will have to pay income taxes, but income taxes aren’t charged as soon as someone receives income. So, your Nebraska LLC won’t be taxed in quite the same way that a corporation is.
But wait, there are even more LLC tax benefits!
The Tax Cuts and Jobs Act was introduced in 2017, and with this act the Qualified Business Income Deduction (QBID) was instituted as well. QBID is a tax discount of 20 percent that is exclusive to LLCs. This is quite an advantage that LLCs have over other business types.
How To Start An LLC In Nebraska
Now that you know the definition of an LLC and some of the advantages of forming an LLC and you’re still sure that forming an LLC is the best decision for your business in Nebraska, here are the steps you’ll need to take to start a Nebraska LLC.
*IMPORTANT* If you’d like some help with the complicated formation process, then there’s good news for you. There is a type of professional service for exactly this situation and they're called LLC formation services.
LLC formation services will not only help you file the necessary formation documents and remind you of each filing fee and application you must file, but guide you every step of the way and provide you with every business formation service you need to establish your LLC with the Nebraska Secretary of State. They’re not terribly expensive, either. Many Nebraska LLC formation services cost as little as $0 plus the state filing fees. (But my favorite formation service is ZenBusiness which charges $49 plus the state filing fees.)
If you’d like a bit of help to guide you through all the red tape and get you through the formation process, check out my guide on the best LLC service here.
1. Obtain Certificate Of Organization Form
The first step to forming your Nebraska LLC is to draft your Certificate of Organization form. This is also known as the Articles of Organization form in some states, and the two terms are mostly synonymous.
If this is your first time forming an LLC in Nebraska, there are professional services that can assist you. An LLC formation service or online legal service can provide a template and assist with drafting your Certificate of Organization, and they can also help you file the Certificate once it’s complete.
Because the Certificate of Organization form (which may be referred to as the Articles of Organization form in some places) is the primary form you’ll need to file when forming an LLC in Nebraska, the following steps will refer back to the Certificate of Organization form.
2. Choose Your Business Name
One of the most important pieces of information you’ll add to your Certificate of Organization form is the name of your LLC. You can’t just add the first LLC name you think of, however, so this requires a bit of thought.
Each LLC and business in the state of Nebraska must have a business name that differentiates it from other business entities in the state. This means that if another business has already registered the name that you’ve chosen, it’s unavailable. You can check LLC name availability by performing a business name search on the Nebraska Secretary of State business name database here.
Another stipulation is that every Nebraska LLC must use the words Limited Liability Company in their name. You can abbreviate the words to “LLC”, “L.L.C.”, “Ltd”, or “Co”.
These suffixes can be a good way to ensure that you get the LLC name that you want, as well. If your LLC name must contain the words Limited Liability Company, then you can attach the abbreviations to the end of the name in much the same way that you can add numbers to the end of an online screen name to ensure that you reserve some version of the name you want.
Once you’ve found a name for your LLC in Nebraska and checked to make sure that it’s available, you’ll need to file an Application for Reservation of Limited Liability Company Name form which you can get here. You’re required to file this form by mail, and the filing fee is $15.
If you aren’t happy with the name you’ve registered with the Nebraska Secretary of State (i.e. it’s too long or you think it sounds silly with the abbreviations at the end), then you can register for what is known as a ‘trade name’. A trade name is the name for your Nebraska LLC that you present to the world in advertisements, on signs and website banners. You can file an Application for Registration of Trade name with the Nebraska Secretary of State and pay the filing fee of $100 online with a credit card.
3. Choose A Nebraska Registered Agent
Every Nebraska LLC must appoint a “registered agent” and you must list your registered agent’s name and address on the Certificate of Organization.
A registered agent is either an individual or a business entity that will become the point of contact for your LLC in Nebraska, allow you to list the registered agent’s name and address with the Nebraska Secretary of State rather than your own, and accept mail, legal documents and service of process on behalf of your Nebraska LLC during normal business hours.
You can choose to be your own registered agent or hire a professional registered agent service to fulfil your LLC’s legal registered agent requirement. There are pros and cons to both, so I’ll go over them with you and then you can make an informed decision before you appoint a registered agent.
Part of the problem with choosing to be the registered agent for your LLC yourself is that the registered agent must be available during normal business hours on business days to accept service of process and mail on behalf of your Nebraska LLC. Coincidentally, most LLCs also operate during normal business hours on business days, and you can’t be in two places at once to both run your LLC and function as the registered agent.
The hassle that comes from being the registered agent for your Nebraska LLC isn’t just a matter of extra legwork, it can actually cause legal problems and put your business in jeopardy. If you miss a service of process, your Nebraska LLC could be sued and you would have no way to defend yourself which could result in a default judgement against you. Furthermore, since the Nebraska Secretary of State stipulates that a registered agent must be available to receive service of process, they could decide that since your LLC isn’t compliant with their registered agent laws and didn’t hire a registered agent service, your LLC isn’t in good legal standing anymore and can’t legally do business in the state of Nebraska.
The only upside to taking on the role of registered agent for your LLC in Nebraska rather than hiring a registered agent service is that you don’t have to pay any fees to a registered agent service.
If you choose to hire a registered agent service rather than assume the registered agent role yourself, then your business is guaranteed to receive mail and service of process that is sent to your point of contact address and your personal information will remain safe and off the public record. The downside is that hiring a registered agent service can cost between $99-$299 per year.
However, when you consider that you can put your entire business at risk by trying to be the registered agent for your LLC in Nebraska, paying $99-$299 for a registered agent service is well worth it for the peace of mind.
If you’d like to know more about Nebraska registered agent services, click here to read my article about the best Nebraska registered agent.
4. Choose Your LLC Address
The name of your LLC in Nebraska isn’t the only pertinent piece of information listed on your Certificate of Organization form. You’ll also have to list a street address in Nebraska for your business in Nebraska.
If you’ve decided to forgo a registered agent service, then you’ll be required to list the street address of your business. If your business doesn’t have a physical address, you’ll be forced to list your home or personal office address which isn’t ideal because the name and address will be registered with the Nebraska Secretary of State and listed on public record. It’s also worth mentioning that you have to use a physical address in Nebraska- the Nebraska Secretary of State won’t allow P.O. Box addresses to be listed.
If you’ve chosen to use a registered agent service for your LLC in Nebraska, they will provide you with a name and address to register with the Nebraska Secretary of State which protects your personal information and keeps it off the public record while ensuring that your LLC remains compliant with the Nebraska state laws regarding registered agents.
5. Sign And File Your Certificate Of Organization
After drafting your Certificate of Organization and ensuring it contains all the correct information, then it’s time to sign and file the Certificate of Organization with the Nebraska Secretary of State.
When filing your Nebraska Certificate of Organization, be sure to include the following information:
- Your LLC’s name and address
- The name, address, and P.O. Box (if applicable) of your LLC’s registered agent
- The business licenses and authorizations of any LLC members, managers, or professional employees for any professional services your LLC will be offering.
After verifying that your Certificate of Organization contains all the correct information, it's time to sign the document and file your Certificate with the Secretary of State. You can upload the document as a PDF and submit it for online filing through the Nebraska Secretary of State’s website here, or you can file the Certificate via postal mail by sending it to the following address
P.O. Box 94608
Both methods carry a filing fee of $100, plus an additional $5 per page. Once you’ve filed your Certificate of Organization with the Nebraska Secretary of State, you can expect a processing time of 3-5 business days if you choose to file by mail, whereas online filing only takes 1-2 business days to process.
Other LLC Activities
After drafting and filing your Certificate of Organization, there are a few other activities your Nebraska LLC will need to complete to ensure you remain in good standing.
After filing your Certificate of Organization, your Nebraska LLC must publish a notice of organization for three consecutive weeks in a newspaper of general circulation in the county where your LLCs principal office is located. If your LLC does not have a principal business location in Nebraska, then you may publish your notice of organization in the county of your registered agent’s location. After you publish a notice for three consecutive weeks, you must then file an affidavit of publication with the Nebraska Secretary of State.
All Nebraska LLCs are required to file a biennial report once every two years with the Nebraska Secretary of State. You can file your biennial reports online or via postal mail, and the filing fee is $10. Your Nebraska LLC’s biennial report is due during odd-numbered years and must be filed no later than April 1st. As an example, Nebraska LLCs organized during 2021 would need to file a biennial report in 2023 and every two years thereafter.
Depending on where in Nebraska your business is located or what type of business you’ll be conducting, you may be required to obtain additional business licenses and permits. Check with your city or county clerk’s office for local licensing requirements. State licensing requirements can be found on the Nebraska State Business Licensing website here.
If your Nebraska LLC will be collecting sales tax, selling goods, or hiring employees then you will need to register with the Nebraska Department of Revenue. Single-member LLCs without employees may also be required to register with the DOR under certain circumstances. You can register online via the Nebraska DOR’s website here.
If your LLC is based outside of Nebraska, then you’ll need to follow the process for establishing a foreign LLC. Most of the steps to forming a foreign LLC are the same as forming a domestic LLC, with the main difference being the primary form. Instead of a Certificate of Organization, you’ll need to file a Certificate of Authority of Foreign Limited Liability for your business. This foreign LLC application can be filed online or by mail, and the filing fee is the same as the Certificate of Organization. You’ll also be required to appoint a registered agent with a physical address in Nebraska and submit a Certificate of Authority or a Certificate of Existence from your LLC’s home state when you file your foreign LLC application.
If this is your first time filing applications for business licenses and other paperwork, there are professional business services available to help you. A Nebraska PEO service can help you file your biennial report and other documents, and online legal services can also provide assistance with other paperwork.
Nebraska LLC Fee Summary
A logical question to ask when you’re learning how to form a Nebraska LLC is “How much does it cost to form an LLC in Nebraska?”. You can’t get through the business formation process without paying at least one filing fee. Here is a list of the fees and taxes you can expect to be charged when forming an LLC in Nebraska:
Certificate of Organization filing fee: $100 plus an additional $5 per page recording fee
Name Reservation filing fee: $15
Registered Agent Fee: $99-$299
Biennial Report filing fee: $10
State Personal Income Tax: 2.46%-6.84%
State Corporate Income Tax: 5.580%-7.810%
After Starting Your Nebraska LLC
Completing the paperwork necessary to form an LLC is a significant step ahead in your business path, and it is a milestone to be celebrated. So, have a glass of wine or champagne, take a weekend trip, have a great dinner, or crack open a beer and celebrate with your friends.
But you won't be able to celebrate for long since there's still work to be done to ensure that your LLC has the foundation it needs to run successfully as a business. Following the formation of your LLC in Nebraska, you must perform the following steps:
Step 1. Create An Operating Agreement
Nebraska LLCs are not required by the Secretary of State to create or adopt an LLC Operating Agreement, but it is still in the best interest of your business to do so.
Without an Operating Agreement, your LLC will be controlled entirely by Nebraska's business laws and LLC and regulations, which may not be ideal for your business. By creating an Operating Agreement, you can develop operating processes and standards that go above and beyond the state requirements which frequently only cover the minimum standard.
*IMPORTANT* It is critical to settle on the managerial structure of your business before drafting the Operating Agreement. If there are several members and you choose a member-managed structure for your Nebraska LLC, decisions are made using a voting method. If you or your LLC members lack managerial experience, you should think about implementing a manager system instead. Instead of making decisions yourself, your LLC will use managers who are permitted to make high-level decisions under this structure. If you decide to use managers in this manner, make certain that each manager is qualified and trustworthy.
To illustrate how vital an LLC Operating Agreement is to the success of your business, picture your LLC as a computer. The LLC itself is comparable to the computer's case in that it protects the delicate inner workings from the environment. Operating Agreements, like a computer's operating system, provide rules and standards for how the members, managers, and departments of your LLC communicate with one another, as well as what their jobs and obligations are. A computer without an operating system can only execute the most basic operations, such as turning on. Similarly, LLCs that do not have Operating Agreements are severely restricted in their ability to function.
An Operating Agreement also serves as a contract between members, outlining their obligations and power. Poorly drafted Operating Agreements sometimes contain ambiguous or misleading language on these topics which can lead to disputes between LLC members and departments. A badly designed Operating Agreement may also exclude processes for onboarding new members or allocating shares and duties if a member departs, stifling your company's development.
To avoid these scenarios, make sure that the directions in your Operating Agreement are as explicit and comprehensive as possible. A well-written Operating Agreement should include a list of all LLC members, their share of profits and losses, their roles and authority, and how they should interact with your LLC's various departments. If your Nebraska LLC has managers, you should incorporate processes and standards in your Operating Agreement outlining their power and responsibilities. A well-written Operating Agreement with clear directions and thorough operating processes will simplify the everyday operations of your business and allow you to relax as it grows.
If you’ve never written an Operating Agreement before, many LLC formation services offer assistance drafting one with their service package. If you simply need help with the wording, consider subscribing to an online legal service. Northwest Registered Agent also offers a free Operating Agreement template via their website which you can obtain here.
Step 2. Apply For An Employer Identification Number (EIN)
Certain activities your business engages in may require your LLC to obtain an Employer Identification Number (EIN) from the IRS. Among these tasks that may require an EIN are the collection of sales tax and the employment of staff. You may also be required to obtain an EIN if your business is a single-member LLC and you’ve chosen to have it taxed as a corporation, even if you don’t hire employees. An EIN may also qualify your business for additional permits and licenses you may require.
Of course, you are not required to hire employees in order to obtain an Employer Identification Number (EIN). An EIN is simply a number used for tax purposes that will qualify your business for more licenses and permits and also identifies your business in the same way that a Social Security Number identifies you as an individual.
Another incentive to acquire an EIN is that you may use it instead of your Social Security Number more frequently which can help you avoid identity theft.
You can get an EIN from the IRS, and it's a lot easier than you would imagine.
To register for an EIN, go to the IRS website (found here), complete the EIN application between 7 a.m. and 10 p.m. Monday-Friday, and then file the application for your Nebraska LLC's EIN.
Step 3. Open A Business Bank Account
The final step in ensuring that your LLC has the essential business fundamentals is to open a business bank account exclusively for your LLC.
Many LLC owners ignore this stage because they either forget or are unaware of its significance; nevertheless, it is significant enough that you will be grateful you did.
Many LLC and business owners conduct both business and personal financial activities through their personal bank account, assuming that having one bank account for various uses is convenient or timesaving. However, there are several reasons why you should not do so.
The first reason is that it greatly complicates the filing of federal and state taxes. Many business owners who use their personal account for both personal and business transactions assume that they’ll be able to distinguish between the two types of transactions when tax season rolls around. However, tax returns are frequently submitted multiple months after these transactions are made, and the passage of time often makes things much more difficult to remember, so keeping a business bank account is preferable unless you decide to maintain a comprehensive ledger that details all of your business transactions.
The second reason you shouldn't conduct financial transactions for your LLC through your personal bank account is that doing so exposes your personal information as well as the cash in your bank account to liability in the case of a lawsuit. When you conduct LLC financial transactions through your personal bank account, you fully invalidate the limited liability and personal asset protection that an LLC provides.
To put it simply, you should create a business bank account for your LLC to make tax filing easier and to secure your personal information and assets.
To open a business bank account for your LLC, you'll need to have a “bank kit.” A bank kit contains numerous formation documents, including your Certificate of Formation, Operating Agreement, EIN, and the initial resolution of your LLC. You may compile all of this paperwork on your own, however many LLC formation services include bank kits for LLCs among their business services.
The decision to start an LLC is one of the most important decisions you can make for your business in Nebraska, so congratulations!
If you’ve chosen to start an LLC without the use of an LLC formation service (which can cost you as little as $0 plus state filing fees), these are the steps you’ll need to complete:
- Draft the Certificate of Organization form
- Name your LLC
- Choose your Registered Agent
- Choose your LLC address
- Sign and file your Certificate of Organization
Forming an LLC on your own is no easy task. It’s easy to become overwhelmed and frustrated with the sheer number of forms and applications to file, the formation documents you’ll need to acquire, the legal jargon you’ll have to learn and memorize, and the endless amount of red tape and government bureaucracy you’ll have to deal with along the way. But if you complete this task on your own, you’ll feel a tremendous sense of pride that makes all of the effort you’ve put into the task worth it in the end.
Congratulations again on forming an LLC, and good luck on the rest of your business journey!