Starting a Business in Nebraska
A new business in Nebraska is not out of reach. So have you been wondering: exactly how do I start a business in Nebraska? And more importantly, can I do so no matter what the economic conditions are? Can I start a new business in Nebraska during a recession?
New Business in Nebraska: Pros and Cons
Business Insider puts Nebraska in its middle ten states when it comes to starting a new business, in an article published in 2016. This is for the entire country. The state’s startup is average at best.
But Nebraska also has the third highest opportunity share of new business owners in the nation. This makes it a lower competition state for startup companies. But the state has the third lowest percentage of available employees in the nation.
Big Recent Surge
In 2018, Fit Small Business scored Nebraska as their number four best place to start a business in the country. But keep in mind, the methodologies of Fit Small Business and Business Insider are not the same.
Why the huge upswing? Even Fit Small Business acknowledges a change, as Nebraska was in sixteenth place on their list in 2017. Nebraska scores well for the costs of starting a business, labor market, and access to capital. The state also does well for access to education and small business loans.
New Business in Nebraska: Initiatives
There is a significant Nebraska business resource, the Nebraska Advantage. It is a package of incentives, tax credits and refunds. It is designed to support startup companies and the expansion of existing businesses.
So it offers employers $500 – $4,000 per each new job they create. The Nebraska Small Business Advantage specializes in supporting smaller business owners. And it has helped to establish around 250 businesses in the state. It has also created over 18,500 new jobs and added $5.5 billion of investment.
Micro-enterprise Tax Credit
Nebraska also has enacted a 20% refundable micro-enterprise tax credit. It is accessible to companies with five or fewer employees at their start. The state also grants exemptions on capital gains for employees who invest in the stock of their employer based in Nebraska.
The state works to focus on trade relationships with overseas partners like China and Brazil. It has an international trade office in Japan.
Business Innovation Act
Nebraska’s Business Innovation Act supports R & D efforts through Small Business Innovation Research (SBIR) grants. This Nebraska business resource also specializes in restructuring small business investment program. The idea is to benefit business owners in the technology sector.
Start a New Business in Nebraska – Nebraska Top Industries
According to the World Atlas, the biggest industries in Nebraska are insurance and financial services. Manufacturing, agriculture, and transportation also loom large.
Nebraska top industries are also the overall service industry, which includes private health (think in-home health aides and the like).
Smart business owners can find new opportunities. They can work with the bigger industries in the state. They can offer goods or services such as food service, data and other computer services like programming. More ideas are trucking for any industry, or chemical support for medicine or agriculture.
Here is how to start a new business in Nebraska.
Start a New Business in Nebraska – Nebraska New Business Secretary of State Requirements
Register a Business Name
Name availability and registration procedures are on the Nebraska Secretary of State’s website. A corporation must have a unique name. Check a database of preexisting Nebraska corporations on the Nebraska Secretary of State website.
Nebraska Business Permits and Licenses
Local Permits and Licenses
Check with your local municipality, city or county office or website. See if there are any local licensing or permit requirements.
For example, in Lincoln, go to the Forms & Permits page on the city of Lincoln website.
Start a New Business in Nebraska – Business Registration
Make sure to fill out a Nebraska Tax Application with the Department of Revenue.
Start a New Business in Nebraska – Virtual Offices
For other areas of the state, business owners might want to try local business owners. Or ask computer user groups for help in this area. Options may also be virtual business office space in nearby states. These are Colorado, Iowa, Kansas, Missouri, and also South Dakota.
Start a New Business in Nebraska –Build Business Credit
Business credit is credit in a small business’s name. It doesn’t attach to an entrepreneur’s consumer credit, not even if the owner is a sole proprietor and the sole employee of the business.
Thus, a business owner’s business and personal credit scores can be very different.
Since business credit is distinct from consumer, it helps to safeguard an entrepreneur’s personal assets, in case of court action or business bankruptcy.
Also, with two separate credit scores, an entrepreneur can get two separate cards from the same merchant. This effectively doubles purchasing power.
Another benefit is that even startups can do this. Heading to a bank for a business loan can be a formula for frustration. But building small business credit, when done properly, is a plan for success.
Individual credit scores are dependent on payments but also other components like credit usage percentages.
But for company credit, the scores truly only hinge on if a company pays its debts in a timely manner.
Growing small business credit is a process, and it does not happen automatically. A business must actively work to establish small business credit.
However, it can be done easily and quickly, and it is much more rapid than developing personal credit scores.
Merchants are a big aspect of this process.
Performing the steps out of order will result in repetitive denials. Nobody can start at the top with small business credit.
A company has to be Fundable to lenders and merchants.
That is why, a company will need a professional-looking website and email address. And it needs to have website hosting from a merchant like GoDaddy.
Additionally, the company phone number should be toll-free (800 exchange or similar).
A business will also need a bank account devoted solely to it, and it must have all of the licenses essential for operation.
Working with the Internal Revenue Service
Visit the IRS website and get a free EIN for the business. Pick a business entity such as corporation, LLC, etc.
A company can get started as a sole proprietor. But they should switch to a form of corporation or an LLC.
This is in order to diminish risk. And it will take full advantage of tax benefits.
A business entity will matter when it comes to tax obligations and liability in case of a lawsuit. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. Nobody else is responsible.
Setting off the Business Credit Reporting Process
Begin at the D&B web site and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a small business into their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s websites for the business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.
In this way, Experian and Equifax will have something to report on.
First you need to establish trade lines that report. This is also known as vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can start to get more credit.
These types of accounts have the tendency to be for the things bought all the time. Like shipping boxes, outdoor work wear, and office furniture.
But to start with, what is trade credit? These trade lines are credit issuers who will give you initial credit when you have none now. Terms are ordinarily Net 30, instead of revolving.
Hence, if you get approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, like within 30 days on a Net 30 account.
Use your credit. Then repay what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.
Start a New Business in Nebraska –Monitor Your Business Credit
Know what is happening with your credit. Make certain it is being reported and deal with any errors as soon as possible. Get in the habit of checking credit reports. Dig into the specifics, not just the scores.
Update Your Data
Update the relevant information if there are inaccuracies or the data is incomplete.
Fix Your Business Credit
So, what’s all this monitoring for? It’s to dispute any problems in your records. Mistakes in your credit report(s) can be fixed. But the CRAs often want you to dispute in a particular way.
Disputing credit report mistakes normally means you precisely detail any charges you dispute.
A Word about Business Credit Building
Always use credit sensibly! Don’t borrow more than what you can pay back. Track balances and deadlines for repayments. Paying on schedule and completely will do more to boost business credit scores than virtually anything else.
Building small business credit pays off. Excellent business credit scores help a company get loans. Your credit issuer knows the business can pay its financial obligations. They know the company is for real.
The business’s EIN links to high scores and lenders won’t feel the need to demand a personal guarantee.
Business credit is an asset which can help your business for many years to come.
Want to start a new business someplace else in America? Then check out our handy guide to starting a business in any state in the country.
Nebraska’s Response to COVID-19
On March 13, Governor Pete Ricketts issued a state of emergency. On March 17, the Governor issued an executive order to loosen unemployment eligibility restrictions. Nebraska has a COVID-19 hotline for information on the virus and government response.
In addition, Nebraska small businesses are eligible for disaster loans from the SBA.