How to Register for a Sales Tax Permit in Nebraska

Financial independence, flexible working hours and time to be with your family and friends are some of the things you must have daydreamed about as you spend hours and days sitting behind your desk in an office working for someone else. But all this does not have to be a dream or wishful thinking. You can make it a reality if you take matters into your own hands and start working for yourself.

Starting your own business is a step forward in your career. It can bring a number of benefits if you set the foundations and prepare well. Working for yourself can provide you the financial independence you desire, the chance to work when you want and decide to. It will also enable you to spend more time with your friends and family. In addition, if you decide to work for yourself, you will probably look to do something you enjoy. This makes running your own business a fulfilling experience as you are able to see something you create and love to grow from the ground up.

Starting your business in a state like Nebraska can, however, be a daunting task if you fail to cover all the basic steps. These steps include some research and preparation even before you start the legal process of registering your business with the regulatory bodies of the state.

This article will serve as a guide, showing you what to pay attention to and will go over the regulatory steps you need to take to set up your business in the state of Nebraska.

Preparing to Start a Business in Nebraska

Before jumping into the regulatory process, there are certain preparatory steps to take which will provide you with insight into the market, as well as the competition and potential obstacles you might come across when entering the market.

The first step is to consider what you are passionate about. Maybe there is a product or a market you are passionate about and would like to either contribute to its development by giving it your own signature or maybe you think it can be made better if done differently and approached from another perspective. Once you have pinned down the product and the market it is time to look closer into the demand and supply relation, check the prices, the manufacturing costs, supply costs, delivery costs. You also need to take a closer look at your competition to see whether you would actually be competitive in the market and whether there is room for profit.

The results of this market research are an essential part of your business plan, which is usually a requirement if you decide to look for additional funding to get your project off the ground. Banks or any other financial institution will not consider loaning you money or investing in your business if you don’t provide a detailed business plan. Besides market research, product details, competition overview, you will have to estimate all the costs, give profits and revenue projections and expectations based on several market scenarios.

For you, the business plan is actually a checklist to see where you are in the planning and establishment process. But what if your research and calculations show that there is barely any profit for you in the market you would like to enter? If the results turn out to be negative, and the business you are trying to start does not seem sustainable, then try looking for gaps in the market. Smaller, niche segments of any market tend to be the best place to start.

These allow you to grow your business slowly. When you first think about starting your own business, you have to ask yourself if you are ready, if you have what it takes. There certainly are skills you need to run a business. If you don’t think you have the experience, starting small in a niche market allows you to grow with your company and gather the required experience, build a customer base and a reputation among your customers. This is not the only advantage of a niche market. It does not have to be something completely different from your desired market, but actually just a small undersupplied segment of it. An undersupplied segment means you do not have to deal with tight competition and there is more room to for-profit as there is less downward pressure on the prices and this provides your business the biggest chance of success. You are simply covering an existing and healthy demand.

With all the calculations complete, with all your estimations in place, your target market picked and your business plan developed to the finest detail, it is time to look into the legal requirements and the relevant regulatory agencies in order to complete your business registration process.

Registering a New Business in Nebraska

The legal process of registering your business in Nebraska can start with the Secretary of State, but depending on your line of business and the location of your business you might be required to contact a number of local, state or federal agencies in order to complete the registration process. While the steps will be presented in this guide, it is highly advisable to contact an attorney or a business advisor for any issues related to the business registration process as it is important that everything is done properly.

Step number one when starting your business in the state of Nebraska is to decide on the organizational structure of your business. The majority of businesses opt to become sole proprietorships, partnerships, limited liability companies or corporations. A number of aspects can influence this decision, but which of the legal structure mostly depends on your requirements. Each of these structures has its advantages and disadvantages and will dictate your tax requirements and liability exposure.

A sole proprietorship is the simplest form of business structure as it allows for a single owner who, in essence, becomes the business as there is no legal distinction between the two. This is because the owner is liable for all the losses or debts of the company. However, the advantage is that you don’t have much paperwork to fill out. The Secretary of State advises you file a trade name application if you decide to operate as a sole proprietor.

Partnerships are formed by two or more people joining in to do business together under one company. Partners of in a general partnership are personally liable for company debts and obligations, while partners in a limited partnership have limited liability. There is no formal documentation needed if you plan on forming a general partnership; however, to form a limited partnership you have to file a certificate of limited partnership.

Corporations are legal entities in their own right, separate from their owners or shareholders. A corporation is formed by submitting articles of incorporation with the Secretary of State. Limited Liability Companies (LLCs) combine the best from the worlds of corporations and partnership. Owners have limited personal liability, like shareholders in a corporation, but have essentially less formal requirements as well as more freedom when it comes to running the company. LLCs are also formed by filing a certificate of organization with the Secretary of State.

Once you have chosen your business structure, you have to choose a name for your business. Before you go and start marketing a business name, though, make sure the name you plan on using is available and not already taken by someone else. The Secretary of State does stress that even if you find that a name is available, due to the volume of filings your name might be registered with someone else when you submit formation documents. You do have an option to reserve a name for a period of 120 days.

If you are planning on setting up a Limited Liability Company or a Corporation, the state of Nebraska requires you to choose a registered agent for service of process and official government communications. You are able to complete all the filings online with the Secretary of State, in person at the SoC office or by mailing the documents to the address provided in the Contact Details section below. Filing fees apply as well as a $5 per page recording fee for most of the documents.

Your next step includes dealing with the most complicated aspect of the registration process: the tax permit registration. This is completed through the Nebraska Department of Revenue. The state government has set up a one-stop business portal, a business information system, that streamlines the business registration process.

Nebraska Sales Tax Permit

The first question that has to be asked is whether you actually need to register with the Department of Revenue. This largely depends on the type of business you will be running. According to the Department of Revenue, you are required to register if you have employees or plan on engaging in retail sales, renting or leasing tangible property. Even if you plan on providing taxable services, you will have to register with the DoR.

But how do you determine whether you are required to register with the DoR? According to the department, you have to register if you plan on engaging in business, which in the state of Nebraska means you must maintain, occupy or use an office or a place of business in the state. Also, if you have representatives such as salesmen you solicit retail sales, the list is long and can be read complete here under REG-1-004 Permits. The list of these requirements is called a sales tax nexus. Having a sales tax nexus means you have to apply for a sales tax permit.

But on top of that, you also have to determine whether the products you are selling are taxable or the services you provide are taxable. In general, services are not taxable, although there are exceptions to the rule when you are providing a service that will include a creation or manufacturing of a product. On the other hand, tangible products are taxable in the State of Nebraska but there are also some exceptions.

With your nexus and product taxability established, it is time to apply for a sales tax permit. The Department of Revenue that states that every person engaged in business as a retailer has to apply for a sales tax permit. To apply for the sales tax permit in the state of Nebraska, you have to file the documents with the Department of Revenue to the address listed below.

There are some other requirements. For example, you will need a Federal Employer Identification Number (EIN) which is part of the business identification info. You can obtain the EIN at the Internal Revenue Service (IRS) online. You will also have to provide your personal information, the legal structure of your business, and the description of your business. While some fees may apply, registering for a sales tax permit is free of charge. It takes up to two weeks to process the filing, but once you receive your sales tax permit, you will not need to renew it.

Sales Tax Exemptions in Nebraska

While selling tangible goods at retail is taxable, there are some purchases you can make tax free, as long as you provide the Nebraska Resale or Exempt Sale Certificate (Form 13). The resale certificate can be used if you plan on purchasing merchandise for resale. This means that when you purchase items you are going to resell, you can avoid paying tax by providing the exempt sale certificate. The only important thing to remember is to provide all the necessary information in the certificate and to sign it.

If you find yourself on the receiving end of a resale certificate, make sure all the details are filled in properly and that the certificate has been signed by the buyer. The information required includes identification of both the seller and the buyer as well as the reason for exemption and the type of business the buyer is engaged in.The sales tax permit number of the buyer, which is received once you complete the sales tax permit registration, is also required. If you use a paper form of the resale certificate, it has to be signed. You will also have to provide the date of the resale certificate issuance.

If you procure merchandise from a single source or have a number of sources but you continue to make purchases and plan on doing so for a long period of time, you can provide the seller with a blank resale certificate. You are also required to keep all the resale certificates on record in case of an audit.

While this guide covers the steps required to register a business in the state of Nebraska and the steps to obtaining a sales tax permit, we strongly advise you consult a business advisor to make sure you are completing the process properly.

Contact Details

Nebraska Secretary of State’s Corporate Department

State Capitol, Room 1301
Lincoln, NE 68509
Phone: (402) 471-4079
Fax: (402) 471-3666
Mailing address: P.O. Box 94608, Lincoln, NE 68509-4608

Nebraska Department of Revenue

Nebraska State Office Building
301 Centennial Mall
PO Box 98903
Lincoln, NE 68509-8903
Phones: 800-742-7474 or  402-471-5729
Fax: 402-471-5927

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