Starting a business in Nebraska involves a series of legal and practical decisions that set the foundation for everything that follows. Choosing the right entity type, completing required filings, setting up governance documents, and addressing tax and licensing requirements are all steps that deserve careful attention. Making the right choices early can protect your personal assets, minimize tax liability, and position your business for long-term success.
Step 1: Choose Your Business Entity
The first and often most consequential decision is what type of legal entity to form. Nebraska recognizes several common business structures:
Step 2: File Formation Documents with the State
Once you have chosen your entity type, you must file the appropriate formation documents with the Nebraska Secretary of State. For an LLC, this is the Certificate of Organization. For a corporation, it is the Articles of Incorporation. Nebraska also offers an online filing system that allows many routine filings to be completed electronically.
Nebraska requires all LLCs and corporations to designate a registered agent with a physical address in Nebraska who can receive legal notices and service of process on behalf of the entity. If you do not have a Nebraska office, a registered agent service can fulfill this requirement.
Entity selection is not a one-size-fits-all decision. The right structure depends on your goals, your risk tolerance, the number of owners, and how you plan to finance and grow the business. This is one area where legal counsel pays for itself many times over.
Step 3: Draft Your Governance Documents
Formation documents alone are not sufficient to protect you or govern how your business operates. For an LLC, the operating agreement is the foundational document that defines the rights and obligations of members, the management structure, voting procedures, profit distributions, and what happens if a member wants to exit or the business is dissolved. For a corporation, the bylaws serve a similar purpose, supplemented by shareholder agreements and director resolutions.
Many business owners make the mistake of using generic template documents found online. While these can be a starting point, they rarely address the specific circumstances, relationships, and goals of a particular business. A well drafted operating agreement or set of bylaws tailored to your situation can prevent significant disputes down the road.
Step 4: Obtain an EIN and Open a Business Bank Account
Most businesses need an Employer Identification Number from the IRS, even if they do not have employees. The EIN is used for tax filings, opening bank accounts, and other business purposes. Once you have your EIN, open a dedicated business bank account and keep business finances strictly separate from personal funds. Commingling funds is one of the most common ways business owners inadvertently expose themselves to personal liability.
Step 5: Obtain Required Licenses and Permits
Nebraska may require certain state-level licenses or permits depending on the nature of your business. Local governments in Omaha and other Nebraska municipalities also have their own licensing requirements. Some industries, such as healthcare, financial services, construction, and food service, are heavily regulated and require specific licensure before operating. Identifying and obtaining all required licenses before opening is essential.
Step 6: Address Tax Elections and Compliance
The tax treatment of your business depends on the entity type and any elections made with the IRS. LLCs are flexible for tax purposes and can be taxed as sole proprietorships, partnerships, S corporations, or C corporations depending on the number of members and elections made. Working with both a business attorney and a CPA to coordinate entity structure and tax elections from the beginning can produce significant long-term savings.
The attorneys at Horgan Law Firm assist entrepreneurs and business owners throughout Nebraska with entity formation, governance documents, and the full range of legal needs that arise when building a business. If you are starting a new venture or restructuring an existing one, contact us to discuss how we can help.
