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 Nebraska Department of Economic Development, the biggest industries in Nebraska are agribusiness and food processing, and biosciences. More top Nebraska industries are advanced manufacturing, renewal energy, and financial services.

Nebraska top industries are also IT and data services, and health and medical services. Other Nebraska top industries are business services, and tourism and hospitality. The state’s top industries also include call centers and e-commerce, and transportation and logistics.

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 the sciences.

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

The One-Stop Business registrations system will guide you through this. The Nebraska government official website also has information.

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

Go to the Nebraska Secretary of State website. Or go through the Nebraska One-Stop Business online registration system.

Tax Registration

Make sure to fill out a Nebraska Tax Application with the Department of Revenue.

Start a New Business in Nebraska – Virtual Offices

Alliance offers Nebraska virtual business office space in Omaha only. Choose Regus for Lincoln.

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.

The Advantages

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.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

The Process

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. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

Company Fundability

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.

Also, business phone and fax numbers ought to have a listing on ListYourself.net.

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.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Working with the Internal Revenue Service

Visit the IRS website and obtain an EIN for the business. They’re totally free. Pick a business entity such as corporation, LLC, etc.

A company can get started as a sole proprietor. But they will probably want to 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.

Sole Proprietors Take Note

If you run a business as a sole proprietor, then at the very least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the company name. As a result, you can find yourself being personally responsible for all company debts.

Additionally, per the IRS, with this structure there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 chance for corporations! Avoid confusion and drastically decrease the odds of an Internal Revenue Service audit at the same time.

Setting off the Business Credit Reporting Process

Begin at the D&B web site and obtain 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 fastcs.wpengine.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.

Vendor Credit Tier

First you need to establish trade lines that report. This is also known as the vendor credit tier. 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 credit in the retail and cash credit tiers.

These types of accounts have the tendency to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, 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.

Details

Net 30 accounts have to be paid in full within 30 days. 60 accounts need to be paid fully within 60 days. In comparison with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you made use of.

To launch your business credit profile the right way, you need to get approval for vendor accounts that report to the business credit reporting agencies. When that’s done, you can then make use of the credit.

Then repay what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit Tier – It Makes Sense

Not every vendor can help in the same way true starter credit can. These are vendors that will grant an approval with marginal effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may need to apply more than one time to these vendors. So, this is to confirm you are responsible and will pay timely.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move onto the retail credit tier. These are businesses which include Office Depot and Staples.

Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use the small business’s EIN on these credit applications.

One such example is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a D-U-N-S and a PAYDEX score of 78 or more.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move to the fleet credit tier. These are service providers like BP and Conoco. Use this credit to buy fuel, and to repair, and take care of vehicles. Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the company’s EIN.

One such example is Shell. They report to D&B and Business Experian. They need to see a PAYDEX Score of 78 or better and a 411 small business phone listing.

Shell may claim they want a particular amount of time in business or profits. But if you already have sufficient vendor accounts, that won’t be necessary. And you can still get approval.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Cash Credit Tier

Have you been responsibly handling the credit you’ve gotten up to this point? Then move onto the cash credit tier. These are companies such as Visa and MasterCard. Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One example is the Fuelman MasterCard. They report to D&B and Equifax Business. They need to see a PAYDEX Score of 78 or more. And they also want you to have 10 trade lines reporting on your D&B report.

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

Also, they want you to have an established business.

These are businesses such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are often MasterCard credit cards. If you have 14 trade accounts reporting, then these are doable.

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 and digging into the specifics, and not just the scores.

We can help you monitor business credit at Experian and D&B for only $24/month. See: fastcs.wpengine.com/monitoring.

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.

Disputes

Disputing credit report mistakes normally means you send a paper letter with copies of any proof of payment with it. These are documents like receipts and cancelled checks. Never send the original copies. Always mail copies and retain the original copies.

Fixing credit report errors also means you precisely detail any charges you dispute. Make your dispute letter as understandable as possible. Be specific about the issues with your report. Use certified mail so that you will have proof that you sent in your 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.

Learn more here and get started toward opening a new business in Nebraska.

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 

Here’s what Nebraska is doing about 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. Nebraska small businesses are eligible for disaster loans from the SBA. 

See: governor.nebraska.gov/press/gov-ricketts-issues-emergency-declaration-covid-19 and governor.nebraska.gov/press/gov-ricketts-issues-executive-order-loosen-unemployment-insurance-eligibility-requirements 

And see dhhs.ne.gov/Pages/Statewide-COVID-19-Information-Line-Opens-for-Residents.aspx

See also: omahachamber.org/crisis-response-resources-covid-19/#smallbiz