How to Start an S Corp in Nebraska

Before forming an S corp, you have to consider the following factors:

• Is an S corporation the best strategy for your business?
• S corporation restrictions
• Are S corp tax advantages right for you?

Is an S Corporation the Best Strategy for Your Business?

For help with choosing the right structure for your business, visit our Choosing a Business Structure guide.

S Corporation Restrictions

S corps have several restrictions, such as being limited to one class of stock and 100 shareholders. Read our What Is an S Corporation guide for full details.

Are S Corp Tax Advantages Right for You?

An S corporation is a tax designation that can be elected by an LLC or corporation. With an S corp, business owners are considered employees of the company and must receive a reasonable salary. Since all S corps technically have employees, the s corp must run payroll. 

In order to benefit from a Nebraska S corp tax designation, your business needs to make enough money to offset payroll expenses. Furthermore, S corps are beneficial for business owners who take large distributions in addition to their salary.

To learn more about the tax advantages of an S corp, read our LLC vs. S corp guide and take a look at our S corp tax calculator.

There are two main ways to start an S corp:

• By forming an LLC and electing S corp tax status from the IRS when you request your employee identification number (EIN)
• By forming a corporation and electing S corp status from the IRS

We recommend not starting a corporation with the S corp tax status because the S corp negates all of the benefits of a corporation.

Recommended: If you have an existing LLC, visit our How to Convert an LLC to S Corp guide.

Step 2: Choose Your Nebraska Registered Agent

You must elect a registered agent for your Nebraska LLC.

An LLC registered agent will accept legal documents and tax notices on your LLC's behalf. You will list your registered agent when you file your LLC's Certificate of Organization.

Many business owners choose to hire a registered agent service. Many of these services will form your LLC for a small fee and include the first year of registered agent services for free.

Step 3: File the Nebraska LLC Certificate of Organization

The Nebraska Certificate of Organization is used to officially register an LLC.

Step 4: Complete Publication Requirements

All new LLCs in Nebraska must publish a Notice of Organization to a newspaper in general circulation. The newspaper must be in the county where the LLC’s principal office is located, and the Notice of Organization must be published for three consecutive weeks. 

Your Notice of Organization must include:

• The name of the LLC
• The street address of the designated office
• The nature of the LLC’s business

After you have published your Notice of Organization for three consecutive weeks, you will receive an affidavit of publication from the newspaper that you can file with the Secretary of State. To file an affidavit of publication, use the form below.

Step 5: Create an LLC Operating Agreement

An LLC operating agreement is a legal document that outlines the ownership and member duties of your LLC.

For more information, read our Nebraska LLC Operating Agreement guide.

Our operating agreement tool is a free resource for business owners.

Step 6: Get an EIN and Complete Form 2553 on the IRS Website

An EIN is a number that is used by the US Internal Revenue Service (IRS) to identify and tax businesses. It is essentially a Social Security number for a business.

EINs are free when you apply directly with the IRS.

Elect S Corp Tax Status
During the online EIN application, the IRS will provide a link to Form 2553, the Election By a Small Business form.

Visit our Form 2553 Instructions guide for detailed help with completing the form.

This is the form to elect S corp tax status for your LLC:

After filing all the paperwork, it’s important to follow state and local laws in order to keep your business operating in good standing. Nebraska businesses will need to file a biennial report and pay state taxes.

Nebraska S Corp Biennial Report

While your Nebraska LLC may be taxed as an S corporation, you will still need to file a biennial report like any other Nebraska LLC. These reports must be submitted every other year to the Nebraska Secretary of State. Biennial reports allow you to provide the state of Nebraska with updated information on your business and help the state track tax payments.

Even in the event that your business does not make a profit, a biennial report is still required. These reports are due by April 1 of odd-numbered years. If you do not file a biennial report, you risk losing your LLC status.

For a step-by-step guide, visit our Nebraska Biennial Report page.

Nebraska S Corp Taxes

S corporations benefit from pass-through taxation, meaning the business’s profits pass-through to S corp owners’ individual tax returns. S corp owners make money from their reasonable salary and distributions, and Nebraska S corp owners will need to pay various taxes.

Federal Self-Employment Taxes

Self-employment taxes cover social security and medicare. The self-employment tax rate is 15.3%, and money you take as salary will be subjected to the self-employment tax. However, distributions are not subjected to this tax.

Federal Income Taxes

Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets as well as the percent owed will change each year. Both your salary and distributions are subjected to federal income tax.

Nebraska Income Taxes

Similarly to federal income taxes, Nebraska’s state income tax rate is gradual and ranges from 2.46% to 6.84%. Your specific Nebraska income tax rate will depend on your income bracket. When compared to other states, Nebraska’s income tax rate is fairly average. Some states have income tax rates of 0%, while other states can have income tax rates that are higher than 10%. 

File Nebraska S Corporation Income Tax Return Form 1120-SN

All Nebraska S corporations must file Form 1120-SN with the Nebraska Department of Revenue. This form reports state income taxes and is similar to Form 1120S. Form 1120-SN is due each year before the 15th day of the third month following the close of the taxable year. Therefore, if your tax year ends in December, this form is due before March 15th.

Nebraska Business Tax Registration

Anyone starting a new business in Nebraska must register with the Nebraska Department of Revenue if they have employees, retail sales, lease Nebraska property, or will provide services subject to taxes. This means that many Nebraska LLCs will need to register for business taxes, and this should be done before starting business operations. However, companies without employees who simply provide a service may not need to register.

For more information, visit the Nebraska Department of Revenue website.

Nebraska Sales and Use Tax

Nebraska’s statewide sales tax rate is 5.50%, but many local jurisdictions throughout the state also impose their own sales tax rates in addition to the state rate. Local sales tax is capped at 2.50%. If your business sells products and services that require collecting sales tax, you will need to be sure to file and pay Nebraska Sales and Use tax.

Visit the Nebraska Department of Revenue website to learn more.

Additional State Taxes

The Nebraska Department of Revenue oversees the state’s taxation and outlines specific business taxes. Depending on your business’s specific industry, location within the state, and number of employees, there are additional state taxes and fees that your business may be required to pay. 

Here are some examples of taxes and fees business owners may have to pay in Nebraska:

• Waste reduction and recycling fee
• Litter fee
• Cigarette tax
• Motor fuels tax
• Charitable gaming tax

We recommend you visit the Nebraska Department of Revenue website for additional information.

Nebraska Local Taxes and Laws

The laws governing Omaha differ from those in Lincoln. Your business taxes, permits, and ordinances may vary based on your local jurisdiction, and for this reason, we recommend all Nebraska business owners research how their local jurisdiction may impact their business operations.