How to Incorporate in Nebraska vs. How to Start a Nebraska LLC

Understanding the main characteristics true of all LLCs and corporations will help you begin making your decision:

• Maintenance
  Expect a high level of maintenance if you plan to form a corporation, both on a day-to-day and annual basis. Corporations have more formalities than an LLC, like electing a board of directors, holding shareholder meetings, and maintaining internal records such as meeting minutes and stock issuance. On the flip side, you can expect a minimal amount of maintenance if you form an LLC. LLCs will need only minimal paperwork, have flexibility when a decision is needed, and have low annual upkeep. An LLC is the best choice if you have a small to medium-sized business and can only handle a low amount of maintenance.
• Tax Structure
  An LLC is the simpler and less expensive option in terms of time and paperwork for business owners during tax season, since an LLC is not a separate taxable entity from its owners. LLCs are pass-through tax entities, where income and losses pass through the business and onto the members to report on their personal income tax return. Corporations are more advanced for a business owner to take care of during tax season. A standard corporation defaults to a tax structure called a C corporation, and is known for what’s called double taxation, where a business’s net income is taxed initially by a corporate tax, and then taxed again on personal income, after shareholders receive their profits (dividends) and losses. C corporations are typically taxed at a lower rate on profits, and have opportunities for tax deductions such as health care and travel, and can retain its earnings to be reinvested into the company’s growth. A corporation can potentially elect an S corporation tax status if it’s more beneficial. When you elect an S corporation tax status, your corporation becomes a pass-through entity, and is allowed tax advantages such as dividends not subject to self-employment tax.
• Investors
  If you plan to expand your business with help mostly from investors, starting a corporation is the suitable choice. Investors are more comfortable investing their time and funds in a traditional business structure that offers stock, like a corporation. Investors don’t have to worry about complicating their personal taxes when they invest in a corporation, and only get taxed on profits actually distributed to them. Investors view corporations as a dependable business structure that will provide them with a return on their investment. Having a corporate structure will profoundly impact the ability to raise investment money. On the other hand, investors can still invest in an LLC by owning a percentage of that LLC. Owners of LLCs will have to pay taxes on their distributive shares, even if they haven’t received a distribution on those profits, and can’t issue stock, which is a turn-off for many investors. Consider a corporation if you plan to grow your business big.
• Prestigious Title
  A business starts with its appearance, and having the “LLC” or “Inc” ending on your business name will give it a level of prestige. These endings convey permanence and encourage trust from potential investors or clients, and show that you are serious about your business. While both entities provide a level of prestige, incorporating provides a higher level of prestige for your business, since the corporation is the oldest and most traditional entity type. Keep in mind the LLC has surpassed corporations in popularity in most states, and the prestige of an LLC is continuing to grow.

Note that whether you form an LLC or a corporation, you’ll need to file a Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN) once your company is officially formed with the state of Nebraska. This report provides the federal government with identifying information about your company and those with the most control over profits and business operations. However, unlike state filings, the information shared in your report does not go on the public record and there is no filing fee. (Though if you don’t want to file this on your own, we offer BOI filing service for just $25.)

After exploring the main characteristics that apply to all LLCs and corporations, next is to explore more specific characteristics of what makes a Nebraska LLC or Nebraska corporation unique from other states, which will bring us to the final answer on which entity is best for your business. Each state has its own set of statutes and tax laws that govern the way its businesses operate, and these unique details must be considered when choosing your business entity. The information in this section will provide these specifics for the Nebraska LLC and the Nebraska corporation.

• Nebraska Corporation Income Tax
  The Nebraska corporation income tax is a business tax levied on the gross taxable income of businesses which aren’t registered as a flow-through entity, such as a c corporation. Most corporation income taxes are either a flat or progressive fee with several brackets, but Nebraska is unique and uses a two-bracket system:

  Gross Taxable Income	Tax Rate
  $0 – $100,000	5.580%
  $100,00 +	7.810%

  If you are considering a corporation, talk to a professional about how these corporate income tax rates can impact your business compared to the tax structure of an LLC.

• Nebraska Individual Income Taxes
  The individual income tax rate in Nebraska is a point of interest for LLCs, since the businesses income passes through the LLC and onto the members to report on their individual income taxes. Individual taxes are on a graduated scale, which is a perk for smaller LLCs which will pay a lower tax percentage annually.
  Individual income taxes are on a graduated scale and are adjusted yearly for inflation. The individual income tax brackets are as follows:

  Taxable Income	Tax Amount
  $0 – $3,150	2.46%
  $3,151 – $18,880	3.51%
  $18,881 – $30,420	5.01%
  $30,421 +	6.84%

• LLC Biennial Reports
  In most states, its required to file an annual report for your LLC and corporation. In Nebraska, LLCs and corporations only need to file a biennial report every two years, saving you a noteworthy amount of time and money.
• Nebraska Combines Its Corporate Franchise Tax and Corporation Biennial Report
  Nebraska’s corporation occupation tax and biennial report is a combined report that will satisfy the requirement for a biennial (taking place every two years) report as well as pay the state’s biennial franchise tax referred to as the corporation occupation tax. Most states don’t offer these requirements to be taken care of in a combined report, let alone require them only every two years. This unique report saves your corporation a noteworthy amount of time and money.
• Nebraska LLC Interest Foreclosure Vulnerability
  LLCs in Nebraska do not have the same level of protection as most states, and creditors (a person who is owed funds or assets by a debtor) in Nebraska have an extra remedy against LLCs that owe them, and can order a foreclosure on an LLC. In most states, creditors have one remedy against the debtor of an LLC, which is a charging order that puts a lien on a debtor’s interest (funds and assets) and creditors then have a right to receive any distributions made to the debtor from the LLC, if the LLC makes a distribution. Often times, this leads to the creditor ending up with nothing, since creditors can’t order the LLC to make distributions. For Nebraska LLCs, this same charging order and same lien can be placed, except if a creditor can prove to a court that those distributions under the charging order will not pay off the debt in reasonable time, “the court may foreclose the lien and order the sale of the transferable interest (§ 21-142.c).”
• Publishing a Notice of Incorporation/Organization in Newspaper
  Nebraska is one of three states which still require you to publish a notice of your business formation in the local general circulation newspaper for three consecutive weeks. This additional hurdle requires you to pay a publishing cost that can range anywhere from $40 to $250 depending on your county, and wait for the newspaper to send you a Proof of Publication afterwards so that you can send a copy to the Nebraska Secretary of State. While this is a one-time inconvenience and should not break your decision to form a business, it is extra work to keep in mind, especially if you have a small business.

Nebraska LLC or Nebraska Corporation? Final Answer.
To make your decision on forming either a Nebraska LLC or a Nebraska corporation, consider the size of your business, priority of investors, level of maintenance you’ll need, and the most beneficial tax structure for the future of your business.

The Nebraska LLC is best for you if you have a small to medium-sized business. LLCs in Nebraska are less time-consuming to form and maintain than corporations, and provide easy management, flexibility and liability protection (despite the foreclosure vulnerability discussed earlier). If growing your company large with investors is not your top priorities, you’re looking for the least expensive and sophisticated taxes and annual maintenance, and needing limited liability protection for your business, the LLC is your answer.

The Nebraska corporation is best for you if you plan to grow your business big with the funds from investors, and you have the means for the amount of maintenance required. A Nebraska corporation remains true to design in its substantial amount of paperwork, higher maintenance, and involved yet beneficial tax structure.

If you’re ready to start a corporation in Nebraska, also known as incorporating, you’ll need to file the Articles of Incorporation with the Nebraska Secretary of State. You are not required to submit a specific form, and must create your own form with specific corporation information. Whichever method you choose to file, you must have your own Articles of Incorporation document created. Once your Articles of Incorporation are approved, you officially have your corporation created.

You can file the Articles of Incorporation in the following ways:

• Online at the Nebraska Secretary of State website (recommended)
• By postal mail (you’ll need to include a cover letter with your contact information)
• In person at the Secretary of State office

The base fee to file your Nebraska Articles of Incorporation costs $60, assuming the amount of your authorized capital stock is under $10,000. The base fee increases significantly if you plan to have more than $10,000 of capital stock. There is an extra charge of $5 per page submitted, so it’s wise to keep your Articles of Incorporation as short as you can.

If your authorized capital stock is more than $10,000, there is a bracketed system to determine the base cost of your Articles of Incorporation:

Nebraska has fairly quick approval times at about four days (not counting mailing time if you choose to file that way).

To complete your Nebraska Articles of Incorporation, include the following information:

If you’re ready to form an LLC in Nebraska, you’ll need to file the Certificate of Organization with the Nebraska Secretary of State. You are not required to submit a specific form, and must create your own form with specific LLC information. Whichever method you choose to file, you must have your own Certificate of Organization document created. Once your Certificate of Organization is approved, you officially have your LLC created.

You can file the Certificate of Organization in the following ways:

• Online at the Nebraska Secretary of State website (recommended)
• By postal mail (you’ll need to include a cover letter with your contact information)
• In person at the Secretary of State office

The base fee to file your Nebraska Certificate of Organization costs $100. There is an extra charge of $5 per page submitted, so it’s wise to keep your Articles of Incorporation as short as you can.

Nebraska has fairly quick approval times at about four days (not counting mailing time if you choose to file that way).

To complete the Nebraska Certificate of Organization, include the following information:

To keep your business in good standing and updated with the state of Nebraska year after year, you’ll need to take care of a few maintenance tasks.

1. File your biennial report
2. File your annual Nebraska business taxes

In this section, we’ll walk you through the basic instructions and resources you’ll need to help you take care of your tax-related upkeep and annual maintenance.

What is a Nebraska biennial report?
Nebraska LLCs and Nebraska corporations are required to file biennial reports with the Nebraska Secretary of State. The report is meant to update or confirm the records for your business, and lets your business remain in good standing. You can update information such as business address, directors, officers, and managers using the biennial report form.
For Nebraska corporations, the biennial report is combined with the corporation occupation tax, which is based on a business’s net worth.

How do I file a biennial report in Nebraska?
LLCs and corporations in Nebraska need to file their biennial reports either online at the Secretary of State website, or by postal mail. Filing online is faster, more secure, and is the preferred method by the Secretary of State.

How much does it cost to file a biennial report in Nebraska?
Nebraska LLCs will need to pay a biennial report fee of $10 ($13 if filing online). For Nebraska corporations, this fee is $52 ($55 if filing online).

When are Nebraska biennial reports due?
Biennial reports (which are combined with the corporate occupation tax) for corporations are due in even-numbered years by March 1st of the reporting year.

Biennial reports for LLCs are due in odd-numbered years by April 1st of the reporting year.

Preparing your business for tax season involves prior planning and complex paperwork, and you probably have a lot of questions. The filings can get complicated and you may need the help of a tax service or CPA to complete these requirements, but regardless of your accounting skills, we’re here to help get you started.

Take a look at our Nebraska Business Tax FAQ below:

What is the Nebraska corporation income tax?
The Nebraska corporation income tax is a business tax levied on the gross taxable income of businesses which aren’t registered as a flow-through entity, such as a c corporation. Most corporation income taxes are a flat or progressive fee with several brackets, but Nebraska is unique and uses a two-bracket system:

What tax form does a Nebraska corporation need to file for the corporation income tax?
Corporations will need to file Form 1120N-ES for their corporation income tax.

What is the Nebraska individual income tax rate?
The individual income tax rate in Nebraska is a point of interest for LLCs, since the businesses income passes through the LLC and onto the members to report on their individual income taxes. Individual taxes are on a graduated scale, which is a perk for smaller LLCs which will pay a lower tax percentage annually.

Individual income taxes are on a graduated scale and are adjusted yearly for inflation. The individual income tax brackets are as follows:

What tax forms does a Nebraska LLC need to file?
For single member LLCs, submit a Schedule C as part of your personal tax return.
For multi-member LLCs, submit Form 1065 along with Schedule K-1, included within the form.

When are my Nebraska business tax returns due?
In Nebraska, corporate income tax returns are due on the 15th day of the third month after the end of the tax year, or March 15th for calendar year filers. The corporation occupation tax is due March 1st, however.