Starting a Business in Nebraska – A Comprehensive Guide
How to Start a Business in Nebraska
If you have a business idea and Nebraska is your chosen location, you’re in the right place. This blog is designed to be a valuable resource for anyone looking to start a business in the Cornhusker State. We’ll provide key insights specific to Nebraska, helping you make informed decisions as you set up your venture.
Top Two Benefits of Starting a Business in Nebraska
- Robust Economic Environment: Nebraska boasts one of the most stable economies in the United States. With a diverse range of industries, including agriculture, manufacturing, and information technology, new businesses have a wide array of opportunities.
- Supportive Business Climate: Nebraska is known for its supportive business climate. The state offers various incentives and assistance programs for startups, making it an attractive place for entrepreneurs.
Top Two Challenges When Starting a Business in Nebraska
- Geographical Limitations: While Nebraska’s vast rural areas can benefit certain businesses, they can also pose challenges. For instance, businesses that rely heavily on foot traffic may need help reaching a large customer base.
- Workforce Availability: Despite Nebraska’s low unemployment rate, finding skilled labor can be challenging, particularly in specialized industries. It’s important to consider this when planning your business.
Remember, every state has its unique benefits and challenges. You can turn these challenges into opportunities with the right planning and understanding of the local business landscape. Stay tuned as we delve deeper into the specifics of starting a business in Nebraska in the following sections.
Regulatory Factors and Taxes in Nebraska
When starting a business in Nebraska, it’s crucial to understand the regulatory factors and tax implications. One of the critical taxes that businesses in Nebraska need to be aware of is the state corporate income tax. Nebraska has a bracketed corporate income tax system, with rates ranging from 5.58% to 7.25% depending on the corporation’s federal taxable income. This means that the more revenue your business generates, the higher your tax rate be subject to.
In addition to the corporate income tax, businesses in Nebraska are also subject to a state sales tax. The state sales tax rate in Nebraska is 5.5%. However, it’s important to note that local municipalities can add their own sales taxes on top of the state rate, bringing the total sales tax rate up to 7.5% in some areas.
Furthermore, Nebraska imposes a state property tax. While this tax doesn’t directly affect businesses, it can impact commercial property owners and renters. The property tax rates vary by county, but on average, Nebraska has one of the highest property tax rates in the country, with an average rate of 1.65% of a property’s assessed value.
Understanding these taxes is crucial for any business planning to operate in Nebraska. Proper planning and consultation with a tax professional can help ensure your business complies with all state tax laws and regulations.
How do I Choose a Business Structure?
There are five primary types of businesses. Each type of business entity is described below.
A business owned and operated by one individual with no legal distinction between the business and the owner. The owner is personally responsible for all debts and liabilities of the business. Most small business owners in Nebraska use this business type.
Limited Liability Company (LLC)
A flexible business organization that combines the liability protection of a corporation with the tax benefits and simplicity of a partnership. Owners of an LLC are called members, and their assets are typically protected from the debts and liabilities of the business. You have the flexibility to define many aspects of how your business will work in your Articles of Organization.
A type of corporation allows for pass-through taxation, meaning that profits and losses are passed through to the shareholders and reported on their tax returns. S-Corporations are limited to 100 shareholders and must meet specific eligibility requirements. An S-Corp can be particularly advantageous if the founders or investors have other income. If the business doesn’t generate a profit in any year, the shareholders can use the losses from a tax perspective.
A separate legal entity from its owners (shareholders) means that the corporation can enter into contracts, own assets, and sue or be sued. C-Corporations are subject to double taxation, meaning that the corporation and the shareholders are taxed on profits.
A Note About S-Corps and C-Corps
For both S-Corporations and C-Corporations, your business formation documents will include Articles of Incorporation, sometimes called a Corporate Charter. The specific requirements and format of Articles of Incorporation can vary by jurisdiction. It is advisable to consult with a business attorney or online legal service such as Legal Zoom to ensure compliance with local laws and regulations when drafting and filing these documents.
Limited Liability Partnership (LLP)
A partnership that limits the personal liability of its partners. LLPs are typically used by professional service providers such as lawyers, accountants, and architects. Each partner is protected from the other partners’ wrongful acts, omissions, and negligence, but they may still be personally liable for their actions.
Distribution of Businesses
|Percent of Businesses in Nebraska
|Limited Liability Company (LLC)
|Limited Liability Partnership (LLP)
The percentages may vary yearly depending on the industry and location. Additionally, the data includes businesses registered in states other than Nebraska but operating within the state.
What is an Employer Identification Number – EIN?
Definition of an EIN or Employer Identification Number
An Employer Identification Number, often abbreviated as EIN, is a unique nine-digit identifier the Internal Revenue Service (IRS) assigns to businesses operating within the United States. This number simplifies business tax administration and is referred to as a Federal Tax Identification Number or Federal Employer Identification Number.
Do I Need One to Start a Business in Nebraska?
You’ll probably need an EIN to launch a business in Nebraska. This identifier is essential when establishing a business entity, hiring employees, obtaining licenses, or setting up a business bank account.
How Do I Get One?
Securing an EIN is a straightforward process. You can apply directly on the IRS website, which is the quickest method, as you receive the number immediately after completing the application. Alternatively, you can submit Form SS-4 to the IRS via mail or fax. If you require further assistance or wish to learn more, you can reach out to the IRS at 1-800-829-4933 or visit their website at https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers.
How to Start a Business in Nebraska – Important Registrations
Registering My Business Name
To kickstart your business in Nebraska, one of the first steps involves registering your business name officially with the Secretary of State’s office. You can reach them at (402) 471-2554 or visit their website at https://sos.nebraska.gov/.
Registering a DBA (Doing Business As) If Relevant
If you run a business under a name that is not its registered name, you must register a DBA (Doing Business As) with the Secretary of State’s office. Nebraska has 93 counties, each with its local government services and regulations.
You can find a comprehensive directory of Nebraska’s local governments on this website: https://www.nebraska.gov/government/. It provides contact information for each county, which can assist businesses in understanding local rules or requirements.
Registering for Payroll, State Payroll Taxes, and Unemployment Insurance
You must establish an account with the Nebraska Department of Revenue for Nebraska’s payroll taxes and unemployment insurance. Visit their website at https://revenue.nebraska.gov/ or contact them at (402) 471-5729.
Registering for Worker’s Compensation Insurance
Businesses in Nebraska also require worker’s compensation insurance. This insurance can be obtained from a licensed provider. If you use a payroll service, they should also be able to provide worker’s comp.
Registering for Collecting Sales Tax
Businesses in Nebraska must register to collect sales tax. This can be done on the Nebraska Department of Revenue’s website:https://revenue.nebraska.gov/businesses/register-your-new-business-online
Registering for Income Tax
For corporate income state tax, businesses in Nebraska should register through the Nebraska Revenue Services. You can contact them at (207) 626-8475 or visit their website https://revenue.nebraska.gov/
Registering to Pay Property Tax
If you need to pay property tax in Nebraska, contact the assessor’s office in your local county. For more information, you can visit the Nebraska Department of Revenue website: https://revenue.nebraska.gov/.
Permits for Starting a Business in Nebraska
Do I Need a Business Permit to Operate a Business in Nebraska?
At the State Level: Certain businesses may require a state-level permit or license to operate in Nebraska. The Nebraska Department of Economic Development is a good starting point for understanding state-level requirements. You can reach them at (800) 426-6505 or visit their website at https://opportunity.nebraska.gov/.
Check With Your City: City-specific permits or licenses may also be required, depending on the nature of your business and the city where you operate. It’s advisable to check with your city’s local government office or chamber of commerce. For example, if you’re operating in Omaha, contact the City Clerk’s Office at (402) 444-5555 or visit their website at https://www.cityofomaha.org/.
Check With Your Country: At the federal level, certain businesses, such as those dealing with alcohol, tobacco, or firearms, may require a national license or permit. The U.S. Small Business Administration (SBA) provides resources to help you understand federal licensing requirements. You can reach them at (800) 827-5722 or visit their website at https://www.sba.gov/.
Check With Your County: Your county may require specific permits or licenses. It’s best to check with your county’s local government office. For instance, if you’re in Lancaster County, contact the County Clerk’s Office at (402) 441-7481 or visit their website at https://www.lancaster.ne.gov/.
How do I learn about any special permits I need for my business?
If your business requires special permits, it is important to research and seek advice from reliable sources. The Nebraska Business Development Center (NBDC) can provide helpful resources and guidance on permits and licenses. Contact them at (402) 554-2521 or visit their website at https://www.unomaha.edu/nebraska-business-development-center/.
Additionally, industry-specific associations or organizations can provide valuable insights into special permits and regulations relevant to your business type. For example, the Nebraska Restaurant Association could be a helpful resource if you’re in the food service industry.
Lastly, consulting with a business attorney or advisor can be beneficial. They can provide personalized advice based on your business needs and ensure you comply with all necessary regulations.
Financing Options for Entrepreneurs in Nebraska
Starting a business often requires capital. While personal assets and credit cards can provide some initial funding, they may need to be more sufficient or sustainable in the long run. Therefore, Nebraska entrepreneurs should explore various financing options to ensure the longevity and success of their businesses.
Financing a New Business
Securing credible funding sources is crucial for a new business. It provides the necessary capital to start operations and supports growth and expansion. Options can range from grants to investments from venture capitalists or angel investors. Businesses must conduct thorough research to understand which financing options align best with their goals and financial needs.
SBA Loans and Microloans
The Small Business Administration (SBA) provides various loan programs to support small businesses, including microloans. These relatively small, short-term loans offer immediate access to funds for small businesses, helping them meet their immediate financial needs. For more information, visit the SBA’s website at https://smallbusinessplans.com/sba-microloans-for-small-businessess-and-startups/.
SBA Microlenders in Nebraska
Nebraska Economic Development Corporation
Phone: (402) 483-4651
Community Development Resources
Phone: (402) 436-2387
Nebraska Enterprise Fund
Phone: (402) 685-5500
First State Bank Nebraska
Phone: (402) 858-1750
Center for Rural Affairs
Phone: (402) 643-2673
State and Local Grants and Incentives
Nebraska offers several state and local grants and incentives to help small businesses start or expand their operations.
Nebraska Advantage Program
This program provides comprehensive and flexible tax incentives to businesses expanding employment and making significant capital investments. For more information, visit their website: https://opportunity.nebraska.gov/programs/incentives/
Nebraska Innovation Fund
The Nebraska Innovation Fund provides financial assistance to businesses working on innovative research and development projects. It aims to promote technological advancement and economic growth in the state.
Nebraska Department of Economic Development
The Nebraska Department of Economic Development offers a variety of programs and resources to support business growth and enhance the state’s economic vitality. They assist in business financing, site selection, workforce development, and more. For more information, visit their website: https://opportunity.nebraska.gov/.
Angel Investor Groups
For any business seeking investment, Angel investor groups can be an excellent funding source for startups and small businesses. These are individuals or groups of individuals who provide capital for businesses, typically in exchange for ownership equity or convertible debt. In Nebraska, there are several active angel investor groups.
One such group is the Nebraska Angels, a network of over 60 active local angel investors. They provide early-stage capital in the range of $250K – $1M, contribute business expertise, and play an active role in the company. For more information, visit their website at https://www.nebraskaangels.org/.
Another group is Invest Nebraska, a venture development organization that works with entrepreneurs and investors to grow Nebraska’s economy. They provide direct investment and operational assistance to high-growth companies. For more information, visit their website at https://www.investnebraska.com/.
Benefits of a Well-Structured Business Plan
A well-structured business plan is a crucial tool for any entrepreneur in Nebraska. It is a roadmap outlining the business’s goals, strategies, and financial projections. This plan is particularly important in Nebraska, where industries such as agriculture, manufacturing, and information technology are thriving. A well-crafted business plan can help businesses in these sectors identify their target market, understand the competitive landscape, and plan for growth.
The benefits of a well-structured business plan extend beyond strategic planning. It can also be instrumental in securing funding. Nebraska offers a variety of state and local grants, incentives, and loan programs for businesses. A comprehensive business plan can increase a business’s chances of qualifying for these programs, demonstrating the business’s potential for success and financial stability.
Nebraska businesses can use local resources such as the Nebraska Business Development Center, which offers business planning assistance to ensure a proper business plan. Additionally, businesses should seek advice from a business consultant or mentor who can provide valuable insights and feedback on the business plan.
Meeting Lender and Investor Expectations
Meeting lender and investor expectations are crucial to running a successful business in Nebraska. Lenders and investors are looking for businesses that demonstrate potential for growth, financial stability, and a clear plan for success. A well-structured business plan can help meet these expectations by providing detailed information about the business’s operations, financial projections, and growth strategies.
In addition to a strong business plan, businesses in Nebraska can meet lender and investor expectations by maintaining good financial records, demonstrating consistent growth, and clearly understanding the market and competition. Regular communication with lenders and investors can also be beneficial, as it allows businesses to keep them informed about the business’s progress and any challenges it may be facing.
By meeting lender and investor expectations, businesses in Nebraska can secure the funding they need to grow and succeed, whether through a loan from a local bank, an angel investor, or a grant from a state program.
Quick Links to Business Plan Templates and Examples
Where Can I Find a Mentor to Help Me Succeed?
Mentorship can be a game-changer for entrepreneurs, providing invaluable advice, industry insights, and practical strategies tailored to Nebraska’s business environment. Nebraska offers a robust network of organizations and resources dedicated to fostering the success of its entrepreneurs. Here are a few options worth exploring:
- Nebraska SCORE: Affiliated with the U.S. Small Business Administration (SBA), Nebraska SCORE offers free business mentoring, affordable workshops, and a variety of tools and resources to support businesses at every stage of development.
- Nebraska Business Development Center (NBDC): Providing various services, including help with business plan creation and financial analysis, the NBDC is a beneficial resource for new and existing businesses. Contact Info:
Phone: (402) 554-6232
- Nebraska Women’s Business Center: This specialized organization equips women entrepreneurs with practical business development training, personalized counseling, and opportunities to network and learn.
- Invest Nebraska: With a focus on fostering innovation and growth, this organization brings entrepreneurs together with programs and events designed to inspire and equip them.
Phone: (402) 742-7860
By leveraging these resources, entrepreneurs can gain the vital knowledge and support needed to successfully navigate Nebraska’s business environment.
The Economy of Nebraska
Starting a business in Nebraska demands an understanding of the state’s economy. Knowing about the economic patterns, the habits of the consumers, and the growth opportunities can be a great advantage. When the economy is strong, it often paves the way for new businesses to thrive.
Average Household Income
The median household income in Nebraska is about $66,644. This may be lower than the national average, but Nebraska’s diverse population and steady economy make it a promising place to start a business.
Average Level of Education
A significant portion of Nebraska’s population aged 25 and over, about 87.1%, have completed high school. Additionally, around 32.9% hold a bachelor’s degree or higher. These numbers indicate a well-educated workforce in the state, which could benefit businesses needing skilled employees.
Consumer Spending per Capita
In Nebraska, measured personal consumption expenditures (PCE) is $41,142. Although this is lower than in some states, it signifies substantial consumer spending. In addition, the steady increase of PCE over time suggests growing demand, offering potential revenue opportunities for businesses.
Being aware of these economic factors can help business owners make informed decisions and meet the needs of the Nebraska market. Therefore, carrying out a detailed analysis and creating a strong business strategy in line with these trends is essential.
Top Industries in Nebraska:
Nebraska’s economy is diverse, with several key industries contributing significantly to its economic health and growth.
Agriculture is a cornerstone of Nebraska’s economy. The state ranks third in the U.S. for corn production, with over 1.79 billion bushels in 2020. Additionally, Nebraska ranks second in the nation for cattle and calf inventory, with approximately 6.85 million head as of 2021. This robust agricultural sector provides ample opportunities for businesses in farming, food processing, and agricultural technology.
Manufacturing is another vital industry in Nebraska. The state is home to several large manufacturing firms, contributing approximately $13.1 billion to the state’s GDP in 2019. Key manufacturing subsectors include food, machinery, and transportation equipment.
The information technology sector is rapidly growing in Nebraska. The tech industry in Nebraska employs over 40,000 people, with a growth rate of 3.5% in 2020. This growth in the tech sector has increased business opportunities in software development, IT services, and tech consulting.
Healthcare is also a significant industry in Nebraska. The state is home to several major hospitals and healthcare facilities, and the industry employs over 14% of the state’s workforce. The healthcare sector in Nebraska provides a wide range of opportunities for businesses in areas such as medical equipment supply, healthcare IT, and healthcare services.
Looking to the future renewable energy is an emerging industry in Nebraska. The state ranks 13th in the nation for wind energy potential, with wind energy production reaching over 21 million MWh in 2020. This emerging industry could provide new opportunities for businesses in the energy sector.
Understanding these industries and their impact on Nebraska’s economy can provide valuable insights for entrepreneurs looking to start a business there. It can help identify potential opportunities and understand the economic trends that could impact their business.
Network to Grow Your Startup Business in Nebraska
Networking is a top skill successful business owners develop and practice. Here are some ideas to help you get started. You’ll meet new business partners and customers, make excellent contacts and build your reputation.
- Identify Complementary Businesses: In Nebraska’s diverse business landscape, identifying complementary businesses can be a strategic move for entrepreneurs. Complementary businesses offer products or services that align with or enhance your own, creating opportunities for collaboration or cross-promotion. For instance, a new tech startup might partner with an established IT consulting firm to offer comprehensive solutions to clients. Such partnerships can help businesses expand their customer base, increase their market reach, and enhance their product or service offerings.
- Leverage Workforce Talent: Nebraska boasts a well-educated and skilled workforce, which businesses can leverage to drive growth and innovation. The state’s strong education system, including renowned universities and vocational training programs, produces a steady stream of talent in fields ranging from agriculture and manufacturing to IT and healthcare. Businesses can tap into this talent pool to build a competent team to help them achieve their strategic objectives. Additionally, leveraging workforce talent can lead to new ideas, improved processes, and a competitive edge in the market.
- Collaborate with Industry Leaders: Collaborating with industry leaders can provide businesses in Nebraska with valuable insights, resources, and opportunities. Industry leaders often deeply understand market trends, challenges, and opportunities, which can be invaluable for new or growing businesses. Collaboration can take various forms, including partnerships, joint ventures, or mentorship programs. By collaborating with industry leaders, businesses can learn from their experience, gain exposure to new ideas and strategies, and build relationships supporting their growth and success.
Workforce and Talent
Understanding Nebraska’s workforce and talent demographics is crucial for businesses. It provides insights into the available skill sets, wage expectations, and employment trends, which can inform hiring strategies and business planning.
As of 2023, the unemployment rate in Nebraska is approximately 2.8%. This low unemployment rate indicates a strong job market and can mean competition for businesses seeking to hire. However, it also suggests a healthy economy, which can benefit businesses.
The minimum wage in Nebraska is $10.50 per hour. Businesses must factor this into their financial planning, particularly those in industries with traditionally lower-wage roles, such as retail or hospitality.
Average Age and Demographics
The median age in Nebraska is around 36.4 years, with approximately 50.3% of the population being female and 49.7% male. These demographics can influence the types of products or services that are in demand, as well as the available workforce.
Breakdown of People with Various Levels of Education
Focusing on the population aged 25 and above in Nebraska, the education level is as follows:
- 32.9% hold a bachelor’s degree or higher.
- 87..1% have a high school diploma or equivalent.
- 8.9% have no high school diploma.
This information indicates a relatively well-educated workforce, which can benefit businesses requiring skilled workers.
Top Areas of Skilled Workers for Residents of Nebraska
Nebraska’s economy is diverse and robust, with a workforce that reflects this diversity. The state boasts a range of skilled workers across various industries, each contributing to Nebraska’s economic strength and growth.
Agriculture, a cornerstone of Nebraska’s economy, employs many skilled workers. These include farmers, ranchers, agricultural scientists, equipment technicians, and agribusiness managers. These professionals help drive innovation and efficiency in the sector, ensuring Nebraska remains a national leader in agricultural production.
In manufacturing, skilled workers range from machinists and welders to engineers and production managers. These professionals play a crucial role in producing the goods that drive Nebraska’s economy and are in high demand as the sector grows.
Nebraska’s information technology sector is rapidly expanding, creating a need for a wide range of skilled workers. These include software developers, IT consultants, data analysts, and cybersecurity experts. The growth of this sector is driving innovation and creating new opportunities for businesses in the state.
The healthcare sector in Nebraska is also a significant employer of skilled workers. This sector includes doctors, nurses, medical technicians, and healthcare administrators. The demand for these professionals is expected to grow as Nebraska’s population ages, creating opportunities for businesses in the healthcare industry.
There are opportunities for teachers, administrators, and support staff in the education sector. As home to several renowned universities and schools, Nebraska strongly demands education professionals.
Finally, the finance sector in Nebraska offers roles for accountants, financial advisors, and banking professionals. These professionals are crucial in supporting businesses and individuals with their financial needs.
The presence of these skilled workers provides businesses with a pool of talent to draw from when hiring. Additionally, companies that provide services or products to these professionals – such as continuing education or professional development programs, medical equipment, or financial software – may find a ready market in Nebraska. Understanding the distribution of skilled workers across these sectors can help businesses identify opportunities and make informed decisions.
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