When deciding what type of business you’d like to start in Nebraska, one option is a corporation. Because a corporation is considered a separate legal entity from its owners (shareholders), shareholders have less legal accountability for the dealings of the business than, for example, the owner of a sole proprietorship.
There are a few kinds of corporations you can start, and they all have their own benefits and disadvantages:
- C corporations: This is the most common form of corporation. C corporations are double-taxed. They’re taxed as a corporate entity, and shareholders have to include income from the corporation in their personal taxes.
- S corporations: These corporations can only have 100 or fewer shareholders and are only taxed once. A process called “pass-through taxation” allows owners to report the corporation’s earnings on personal tax returns. There’s a lot more paperwork involved when starting an S corporation. For instance, you’ll have to file a 2553 form with the IRS.
- Nonprofit corporations: Nonprofits are considered charitable and can apply with the IRS to be exempt from federal taxes. A nonprofit must adhere to strict guidelines to maintain this tax-exempt status. However, employees still pay personal taxes on their wages.
How do I form a corporation in Nebraska?
Steps to form your Nebraska Corporation:
- Name Your Corporation
- Appoint Directors
- Choose a Nebraska Registered Agent
- File the Nebraska Articles of Incorporation
- Create Corporate Bylaws
- Draft a Shareholder Agreement
- Issue Shares of Stock
- Apply for Necessary Business Permits or Licenses
- File for an EIN and Review Tax Requirements
- Submit Your Corporation’s First Report
To start a corporation in Nebraska, you must file the Articles of Incorporation with the Secretary of State. To simplify forming a corporation in Nebraska, we’ve put together 10 easy steps to form your business:
Step 1: Name Your Corporation
You should choose a name that isn’t the same as or too similar to the name of another business in Nebraska. It’s wise to wait to start advertising your business until you’ve secured a name. Otherwise, you can get stuck with a lot of useless marketing stuff.
If you’ve got a name in mind, you can search on the Secretary of State website or fax, email, or mail an inquiry for name availability to the Secretary of State’s Office, Business Services Division. They’ll let you know if the name is available. Remember, even if it is available, you’ll still have to register for it before it’s yours.
You can submit your name reservation registration with $30 to the Secretary of State. When the name is approved, you have 120 days to file the entity documentation for the business. Use this application to reserve your name.
If your name application is rejected, you can still request a review of the decision. Write out why you think you should be able to use the name and send it to the Secretary of State’s office.
To increase your chances of approval, here are a few rules your corporation name should follow:
- The name has to include one of the following words indicating that it’s a corporation: “Corporation,” “Incorporated,” “Limited,” or “Company.” Alternatively, you can use one of these abbreviations: “Corp.,” “Inc.,” “Co.,” or “Ltd.”
- Your name can’t include any language suggesting it’s part of a government agency.
- Your name also can’t have words indicating your business offers services that it does not. To clarify, if your corporation doesn’t involve banking or engineering, don’t include those words in your name.
- Lastly, the name can’t allude to illegal services.
You can also check the United States Patent and Trademark Office (USPTO) to ensure your desired name hasn’t been trademarked at the federal level. To check at the state level, use the Nebraska Secretary of State online Corporate & Business Search. If you wish, you can also seek a state or federal trademark for your business name.
If you plan on doing business under a name different from the name registered for your company, you’ll need to file for a “doing business as” (DBA) or trade name. Some reasons you might want to use a DBA name include:
- You’re starting a business that falls under the umbrella of your corporation. For example, you may open a store called “The Pillow Guy,” while your corporation is registered as “Pillows United.”
- You’re using a website name different from your corporate name to reach a specific audience.
There is a $100 fee to apply for a trade name in Nebraska, and the name must be renewed every 10 years. You’re also required to state that your corporation has registered for a trade name in a newspaper where your business is located. You will then need to file a notarized Affidavit of Publication with the Secretary of State. Make sure to review the Nebraska legislature on DBA names before you apply for one.
Step 2: Appoint Directors
To handle the day-to-day processes that keep your corporation running, you’ll need to appoint a board of directors. In Nebraska, a corporation legally only needs one board member or incorporator.
As an incorporator, you can be on the board of directors. You can also be a shareholder in your business. However, these three roles have separate functions in a company and don’t have to overlap:
- Incorporators file the paperwork and lay the foundation for the corporation.
- Directors manage the operations of the company.
- Shareholders fund the company by buying stock in it.
You should organize a meeting with your fellow incorporators to appoint directors. The board of directors will, in turn, have meetings to approve bylaws, determine how company shares will be distributed, and handle anything else your company needs to operate.
Step 3: Choose a Nebraska Registered Agent
As a corporation, part of doing business is receiving legal documents and notices of lawsuits. The term for this is “service of process.” Before you start your company, you’ll have to designate a registered agent to handle the service of process and receive official government correspondence.
In Nebraska, a registered agent can be yourself or someone involved in your business as long as they are a Nebraska resident with a street address (no P.O. boxes). It can also be a third party who is commissioned to do business in the state.
Here are some rules about registered agents:
- The registered agent’s office and registered office must be the same.
- The registered agent and their office must stay current in Nebraska, or the company can be shut down.
- You must include the name and location of your registered agent in your corporation’s formation documents.
- If you need to change your registered agent for any reason, you’ll need to file for a new one.
If you’re stuck, you can find a great registered agent partner through ZenBusiness.
Step 4: File the Nebraska Articles of Incorporation
Now that you’ve got your business leaders in place, it’s time to file your Articles of Incorporation. In some states, you’ll need to file a Certificate of Incorporation, which has the same purpose.
Unlike most states, Nebraska does not have a form (neither online nor paper) to complete for the Articles of Incorporation. Rather, you have to create your own following the state statute and the instructions on the Secretary of State website.
You’ll need to include the following information in the Articles of Incorporation:
- The corporation’s name and address
- The amount, class, and par values of shares that the company can issue (The board members will discuss this.)
- The name of the registered agent and street address of the registered office.
- All of the incorporators’ names, addresses, and signatures
- The reason the company will exist
There is a filing fee that can range from $60 for a business with capital of $10,000 or less to $300+ for a company with capital exceeding $100,000. You’ll also have to pay $5 per page to file the document. The pricing table is listed here.
With Nebraska’s Corporate Document eDelivery system, you can upload and file your Articles of Incorporation online.
To file by mail, send two copies of the form and payment to:
Secretary of State
P.O. Box 94608
Lincoln, NE 68509-4608
Checks and money orders must be made out to the “Nebraska Secretary of State.”
As a business incorporator, you might be involved in deciding the allocation of your company’s shares. Many small businesses enable their corporation to give out 1,000 to 10,000 shares of stock. The point is to empower your business to issue more shares than it currently needs.
For example, if your company has three shareholders and 1,000 shares to divvy up, you may only give each investor 100 shares, leaving 700 for future use. Having a reserve of shares will enable your company to issue more when it needs to without going through a lengthy and expensive Articles of Incorporation amendment.
Step 5: Create Corporate Bylaws
To keep your company running smoothly, you’ll have to create bylaws to designate how your corporation will do business and what regulations it will abide by. Corporate bylaws are a requirement in Nebraska.
It may even behoove you to hire a lawyer to put these bylaws together or use a template like the ones provided by ZenBusiness.
Corporate bylaws will consist of:
- An index of your board of directors, their qualifications, and their jobs
- Specifics on any committees
- Rules for conflicts of interest
- A business purpose
- Scheduled meetings for the year
- Goals for all leaders in the company
- Management structure and responsibilities of each officer
- Procedures for replacing or removing a member of the board of directors
- How shares are given out and how the stock is sold or transferred
- Rules for voting on changes
- Rules for amending the bylaws
After your bylaws are created, store them in a corporate book of records and keep them nearby.
Step 6: Draft a Shareholder Agreement
The next document you’ll need to create is the shareholder agreement to identify the shareholders’ responsibilities, rights, and powers. This document should have:
- The shareholders’ names and contact information
- How votes are conducted
- Financial commitments
- Time obligations
- How changes to the agreement are handled
- The process for selling or transferring stock
- Where dividends are appropriated
- A plan for the assets in case the business closes
Step 7: Issue Shares of Stock
When starting a corporation, you are required to issue stock. As stated in step four, you should issue fewer shares of your company than your company is authorized to distribute.
Starting your business requires a certain amount of capital or funding. When you decide how much capital you need to get your corporation started, divide it into stock shares, and distribute them among your shareholders.
Keep a record of each issued share. You’ll need to document them in your annual report.
After stocks are issued, they can be traded or sold.
You can issue stocks publicly or privately:
- Stocks issued privately can go to founders, initial investors, or private investor groups.
- Members of the public can purchase stocks issued publicly.
Remember that if you choose to issue stock publicly, your corporation will have to file quarterly with the U.S. Securities and Exchange Commission (SEC) and record how many shares you’ve issued.
The Nebraska Department of Banking and Finance website can fill you in on state rules for issuing stock.
Step 8: Apply for Necessary Business Permits or Licenses
A business that participates in taxable services or retail sales has to attain a sales tax permit. You can get this with the Nebraska tax application form, which can also register for several other corporate taxes.
Depending on your corporation, you might need to obtain other licenses and permits locally, statewide, or federally. Some examples of licenses and permits you might need are:
- Occupational licenses for things like tobacco sales
- Zoning permits or licenses to operate in certain areas
- Service licenses for professionals like doctors or lawyers
Licensing varies greatly from industry to industry, and there’s no catch-all list of required licensing for any corporation. Do your research to make sure you have the proper licenses in place for your business. You may even decide to hire a professional to research for you to save time.
Step 9: File for an EIN and Review Tax Requirements
Because a corporation is considered a separate taxable entity from its shareholders, it needs its own type of Social Security number. This is called an Employer Identification Number (EIN).
Visit the IRS website to register for an EIN. After a short application process, you’ll receive your corporation’s EIN for free. You’ll need your EIN to file taxes for your corporation, so make sure it’s safe and easily accessible.
Corporations must pay their own taxes apart from shareholder income. Your corporation must file at the state and federal levels. Check here to see if your corporation needs to register with the Nebraska Department of Revenue.
Step 10: Submit Your Corporation’s First Report
Nebraska requires you to publish a notice of incorporation in a legal newspaper in the county of your corporation’s principal office for three consecutive weeks. Afterward, you’ll need to file proof of publication with the Nebraska Secretary of State.
The publication needs to include the following:
- The corporation’s name
- The number of shares the corporation is authorized to issue
- The street address of the registered office
- The name of the registered agent
- The name and street address of each incorporator
As a corporation, you’ll have to file a biennial occupation tax report on even-numbered years. The report is due by March 1.
In addition to the biennial occupation tax report, a Nebraska benefit corporation annual benefit report is due every year within 120 days following the end of the fiscal year of the benefit corporation.
If either is not filed with the Secretary of State Business Division on time, your company can be dissolved.
Your biennial report needs to include:
- The corporation’s name
- The state where it was formed (Nebraska)
- The name and address of your registered agent
- The corporation’s address
- Director and officer names and addresses
- Value of all property owned
- Amount of capital paid
- Signature of the person filing the report
You can locate your business by going through the Secretary of State’s search engine; from there, you can fill out the form online or print it and mail it in.
How much does it cost to start a corporation in Nebraska?
Based on your corporation’s size and scope, the overall cost for starting it can vary greatly. At the small end, you’ll have to pay at least $60 to file your Articles of Incorporation. You may also choose to reserve your company name for $30. Some other charges you may incur are:
- $5 fee for extra pages when filing forms
- Larger fees for corporations with more initial capital
- Occupational and service licenses for different types of corporations
- Fees from hiring legal professionals
- Fees for reserving a website domain name
Although the state fees are required regardless of whether you choose to file documents yourself, ZenBusiness can be a more affordable option than using lawyers and also decrease your stress while getting your business up and running.
What are the benefits of a corporation in Nebraska?
There are quite a few benefits to starting a corporation in Nebraska. Here are a few:
- Your personal assets are protected because the corporation is considered a separate legal entity.
- Issuing stock helps to gain funding.
- Nebraska has a pro-business tax structure. The Nebraska Advantage Package outlines tax benefits for growing businesses.
Nebraska does have favorable conditions for starting a business, but there are some disadvantages to starting a corporation. Corporations are double taxed. After the corporation pays taxes, you still have to pay the income tax from your share of the profits on your personal return. This can be remedied by starting an S corporation, but that comes with increased red tape, paperwork, and government regulation.
How is a Nebraska corporation taxed?
To understand how your corporation will be taxed in Nebraska, you’ll have to decide whether you’re starting a C corporation, an S corporation, or a nonprofit corporation.
Because C corporations are separate entities from their owners, they have to file corporate returns. Owners also have to file their income from the corporation on their personal tax returns, which means C corporations are double-taxed. There are some tax perks, though. For example, there’s a wide array of deductions available to C corporations.
In Nebraska, S corporations have a pass-through tax structure. While S corporations are still considered separate entities, all the profits gained by the corporation go directly to the owners’ personal tax returns.
Nonprofit corporations can apply to be tax-exempt from federal and certain Nebraska taxes, but they have to adhere to strict regulations. Employees for the nonprofit do pay income tax on their salaries.
Nebraska Corporation FAQs
- Does running a corporation in Nebraska involve more paperwork than running other types of businesses?
Corporations are known for requiring a lot more paperwork and record-keeping, so the argument can be made that they do require more paperwork than other business structures.
- What is the difference between an LLC and a corporation in Nebraska?
A limited liability company (LLC) can be taxed as a partnership or corporation. LLCs are easier than corporations to maintain, have a more flexible management structure, and involve less yearly reporting.
- How do I change my corporation’s name in Nebraska?
You can change the name of your corporation in Nebraska by filing the Articles of Amendment online.
- How many people are needed to form a corporation in Nebraska?
A single person can form a corporation in Nebraska.
- Can I form my Nebraska corporation online?
You can complete some of the forms and then upload them. You can learn which forms are available for online filing via the Nebraska Secretary of State website.
- How do I dissolve my Nebraska corporation?
To dissolve your corporation, you will need to file the Articles of Dissolution online.