Nebraska Business License Basics

Are you thinking of launching a business in Nebraska but not sure what to do first? The registration process is an important first step, but it can appear complex looking at it for the first time.

In our guide, we’ll take you through each step of the Nebraska business registration process, from choosing your company structure to obtaining the right licenses to help reduce the overwhelm.

Related: Starting A Business In Nebraska Checklist

Step 1: Choose a Business Structure

A business structure (also called a business entity) is how a business is legally organized. In Nebraska, there are four common types of business entities: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC). The choice of entity will impact taxes, personal liability, and the entity’s administrative requirements.

Related: Comparison of Business Structures

Sole proprietorship: This is the easiest type of business structure to form. In a sole proprietorship, the owner and the business are considered the same legal entity. The owner is personally responsible for all debts and liabilities.

Pros

• Easy and inexpensive to set up.
• Complete control over business decisions.
• Minimal regulatory requirements.

Cons

• Unlimited personal liability for business debts and obligations.
• Limited business continuity, as it ceases to exist upon the owner’s death or incapacitation.

How to Start a Sole Proprietorship in Nebraska

General partnership: A general partnership consists of two or more individuals who agree to share ownership, profits, and responsibilities of a business. Like a sole proprietorship, each partner is personally responsible for the partnership’s debts and liabilities.

Pros

• Easy to establish and low setup costs.
• Shared decision-making and financial responsibilities.
• Business income is reported on each partner’s personal tax return.

Cons

• Unlimited personal liability for each partner.
• Potential conflicts between partners (a partnership agreement is highly recommended).
• Limited business continuity, as it may dissolve upon the departure or death of a partner.

Corporation: A corporation is a separate legal entity owned by shareholders, providing them with limited liability protection. It is more complex and costly to set up and maintain than other business structures.

Pros

• Limited liability for shareholders.
• Easier to raise capital through the sale of stock.
• Business continuity, as it exists independent of its owners.

Cons

• Expensive and complex to establish and maintain.
• More extensive regulatory and reporting requirements.

Related: How to Form a Nebraska Corporation

Limited Liability Company (LLC): An LLC is a hybrid business structure that combines the limited liability protection of a corporation with fewer administrative requirements.

Pros

• Limited liability for members (owners).
• Pass-through taxation, avoiding double taxation.
• Flexibility in management and profit distribution.
• Fewer formalities and reporting requirements compared to a corporation.

Cons

• More complex and costly to set up than a sole proprietorship or general partnership.
• Potentially higher state fees or taxes, depending on local regulations.

Related: How to Form a Nebraska LLC

Step 2: Select a Business Name

After choosing your business structure, the next step is selecting and registering your business name.

For sole proprietors and general partnerships operating under a name different from the owner’s legal name, you must register a Nebraska Trade Name with the Nebraska Secretary of State. For instance, if Jane Doe wants to run her business as “Heartland Bakery,” she would need to register this Trade Name.

Corporations and LLCs select their legal name during the formation process. If they want to register an additional name in addition to the corporation’s or LLC’s legal name, they will register for a Trade Name.

Regardless of your business structure, all Trade Names in Nebraska must be unique or sufficiently distinct from other registered names to prevent naming conflicts. To ensure your chosen name is available, conduct a Nebraska business search on the Nebraska Secretary of State’s website.

Step 3: Federal Employer Identification Number 

After naming your business, many Nebraska entrepreneurs need to obtain a Federal Employer Identification Number (EIN). This unique nine-digit identifier, issued by the Internal Revenue Service (IRS), is your business’s tax ID.

You’ll need an EIN if:

• Your business has employees
• You’ve formed a corporation, partnership, or multi-member LLC

While sole proprietorships and single-member LLCs without employees can use the owner’s Social Security number for tax purposes, they may still opt for an EIN.

Obtaining an EIN is a straightforward process. The IRS offers a free online application that typically takes just a few minutes to complete. Alternatively, you can apply by mail or fax if you prefer.

How to Apply for a FEIN

Step 4: Professional Licensing

Some occupations in Nebraska require professional licensing before you can offer services. There are a variety of boards that oversee professional licensing.

Common professions that require licensing include:

• Architects – Nebraska Board of Engineers and Architects
• Acupuncturists – Nebraska Board of Medicine and Surgery
• Barbers – Nebraska Board of Barber Examiners
• Contractors – Nebraska Contractor Registration
• Childcare providers – Nebraska Department of Health and Human Services (DHHS)
• Healthcare professionals – Multiple boards under the DHHS

Food establishments are licensed by the Nebraska Department of Agriculture.

To determine if your profession requires a license and to apply, visit the State of Nebraska website or the relevant licensing board’s website. Remember, professional licensing is separate from general business registration and may involve specific education, exams, or experience requirements.

Step 5: Nebraska Tax Identification Number

Many businesses in Nebraska need to register with the Nebraska Department of Revenue (DOR) to obtain a Nebraska Tax Identification Number. This number is necessary for various tax purposes and is obtained by completing the Nebraska Tax Application.

The Nebraska Tax Application is a combined registration that typically includes:

• Sales tax permit
• Income tax withholding
• Other applicable state taxes

Who needs to register:

• Businesses with employees
• Businesses engaging in retail sales
• Companies renting or leasing tangible personal property
• Businesses providing services that are subject to sales tax

To register, submit the Nebraska Tax Application to the Nebraska Department of Revenue.

Step 6: Resale Certificate

A Nebraska Resale Certificate is a document that allows businesses to purchase inventory or goods for resale without paying sales tax at the time of purchase. Instead of paying the sales taxes themselves, these businesses will collect sales tax from the end customer when the product is sold.

Who needs a Resale Certificate:

• Retailers
• Wholesalers
• Manufacturers
• Any business that buys goods to resell to customers

To get a Resale Certificate, businesses must first register for a Nebraska Tax Identification Number with the Department of Revenue. Once registered, they can use their Tax ID to issue resale certificates to suppliers.

Step 7: Local Business Licenses

There isn’t a general statewide business license in Nebraska, but many cities and counties require local business licenses. Here are some common types of local licenses:

• General Business License: Often required for most businesses operating within city limits, these are typically issued by the city clerk’s office or finance department. For example, the City of Lincoln City Treasurer’s office requires a general business license for most companies.
• Food Service License: Restaurants, cafes, and food trucks usually need a local health permit. These are often issued by county health departments.
• Liquor License: Businesses selling alcohol require a local liquor license, usually issued by the city clerk or county board. The City of Omaha, for instance, requires approval from the City Council for liquor licenses.
• Home Occupation Permit: Many cities require a special permit for home-based businesses. In Bellevue, home-based businesses must obtain a Home Occupation Permit from the Planning Department.
• Contractor License: Some cities require local licensing for contractors. The City of Grand Island, for example, requires contractors to obtain a license from the Building Department.

Step 8: Local Building & Zoning Permits

When setting up a business location in Nebraska, it’s important to understand and comply with local building and zoning regulations. These requirements ensure that your business operates in an appropriate area and that your building meets safety standards. Here’s a brief overview:

Zoning Permits: Zoning laws determine where specific types of businesses can operate. Before leasing or purchasing a property, check with your local zoning department to ensure your intended use is allowed in that area. This also applies to home-based businesses, as some residential areas may restrict commercial activities.

Building Permits: If you plan to construct or significantly modify an existing building, you’ll likely need a building permit. These permits ensure that construction meets local building codes and safety standards. Local building departments typically handle these permits.

Certificate of Occupancy: Many municipalities require a certificate of occupancy before a business can begin operations in a building. This document certifies that the building is safe and complies with all relevant codes. After passing final inspections, you’ll usually obtain this from the local building or planning department.

Sign Permits: If you plan to install business signage, you may need a separate permit. Sign regulations can be specific, covering size, placement, and lighting.

Before committing to a location, it’s advisable to consult with local planning or development departments. They can provide information on specific requirements for your business type and chosen location, helping you avoid potential issues down the line.