Articles of Organization

Getting your Nebraska LLC up and running means that you must file articles of organization with the Nebraska Secretary of State, along with the $110 filing fee (the actual fee of $100 plus $10 to receive a certificate of organization from the Secretary of State after filing).

The articles of organization and a copy of the new LLC must be executed (signed) by at least two organizers and must include:

• The LLC's name
• The purpose for which the LLC is being organized
• The address of the LLC's principal place of business in Nebraska
• The name and address of the LLC's registered agent in this state
• The total amount of cash contributed to the LLC and a description and consensus value of non-cash contributions
• The total additional contributions agreed to be made by all members and the times or events that govern when they will be made
• The members' right (if given) to admit additional members and the terms and conditions of the admission
• If the LLC will be manager-managed, the names and addresses of the managers
• If the LLC will be member-managed, the names and addresses of such members
• The period of duration of the LLC (perpetual or for a set time)

A certificate of organization will be issued and delivered along with the conformed copy to the representative of the LLC. The original articles of organization will in turn be filed with the Secretary of State along with the month, day and year of filing.

Registered Agent and Office

Nebraska LLCs are required to have a registered in-state agent who is designated to receive official administrative and legal correspondence from state agencies. The registered agent can be an individual Nebraska resident, or it can be a business entity authorized to do business in the state.

The registered office may be (but doesn't have to be) the LLC's place of business.

Operating Agreement

Almost as critical for the new Nebraska LLC as the articles of organization is the operating agreement. The state doesn't officially require your LC to have this-but it's a critical internal document that officially documents how your LLC will operate on both a day-to-day and a strategic basis.

The operating agreement should name the members, specify how much each member has invested, explain how profits will be divided, and state how much proportional "weight" each member has when issues are voted upon. If there is more than one member, the operating agreement must initially be approved unanimously in writing by the members. The agreement can be amended in the manner specified by the agreement itself, or in a manner permitted by state law.

The operating agreement may also set forth meeting requirements such as the amount of required notice, what constitutes a quorum, voting rules, and so on, but it doesn't have to. Frequently, however, the operating agreement includes requirements for the LLC already listed in state law and regulations. It can also include such items as restrictions or constraints on the power of the members to adopt, amend, or repeal the operating agreement.

Membership in the LLC

An LLC is required to have one or more members; each member must be either a natural person (not a business entity). Members may become a member of or acquire an interest in the LLC when it is first started (by signing the initial operating agreement), or upon the unanimous approval of the LLC's voting members.

To join the LLC, the prospective member usually needs to make a contribution of some kind-for instance, pay cash or transfer property to the LLC-or take a binding obligation to do so. However, a member may be admitted to the LLC without acquiring a membership interest if the articles of organization and/or operating agreement permit it, or if the members vote to do so and the admission is documented in the LLC's records.

An LLC member can only resign in accordance with applicable provisions in the articles of organization and/or the operating agreement. One or both of these documents will also usually state the minimum amount of time a member can maintain membership before being allowed to resign. LLCs can pursue remedies for damages suffered by the organization that result from a member's resignation.

Managers are elected by members for terms according to procedures specified in the operating agreement. Unless otherwise stated in the articles or operating agreement, management power (voting power) of the members is according to each member's capital account balance in the LLC.

Ongoing Requirements

Each Nebraska LLC must keep these kinds of records available at its office for review or inspection:

• The names and addresses of all current and former members and managers
• A copy of the articles of organization and all amendments and related powers of attorney
• A copy of the LLC's federal, state and local income tax returns and financial statements for the past three most recent years
• A copy of every current and prior operating agreement and any amendments

Dissolution

An LLC is dissolved when any one of the following events occurs:

• Event(s) or a time specified in the articles of organization or operating agreement
• The written consent of all members
• Event that makes it illegal for the LLC to continue
• The last member leaves the LLC, unless the assignees vote within 90 days to admit one or more members
• A court order ordering dissolution

Taxes

An LLC by its nature offers some tax advantages over the structure of a corporation, including the availability of more deductions. The biggest advantage is that an LLC is not required to be a separate tax entity like a corporation. Instead, it can be a "pass-through" entity for tax purposes, so that LLC owners (members) report business losses or profits on their personal tax returns, in the same way that a partnership does.

Articles of Incorporation

Actually getting your new corporation authorized to conduct business in Nebraska requires filing articles of incorporation with the Corporation Bureau of the Nebraska Secretary of State's office. The articles must be delivered to the state by one or more incorporators, who may be either any natural person of legal age or a business entity. The articles must include:

• The name(s) and address(es) of each incorporator
• The number of shares that the corporation is authorized to issue and their par value (or, if applicable, the number of shares and par value of each class of shares)
• The street address of the corporation's initial registered office (and mailing address if different)
• The name of the corporation's initial registered agent at that office
• If the corporation is registered or intends to register as an investment company, any provision limiting or eliminating annual shareholder meetings

Some other items that aren't required-but which may be included in the articles of incorporation-are:

• The names and street addresses of the initial directors
• The corporate purpose(s)
• Regulating the powers of the corporation, its board of directors, and shareholders
• Changing the number of board votes that constitutes a quorum
• Limitations on a director's liability for money damages to the corporation or its shareholders in certain situations
• Obligatory indemnification of directors in certain situations

Nebraska requires that your shares have a stated par value. Most incorporators make sure that the capital value of their authorized shares (number of shares multiplied by par value) is $10,000 or less in order to pay the minimum filing fee. If you want to authorize more than one class of shares, you must list the designation of each class, the number of shares in each class, a statement of the par value of the shares in each class, and the rights and restrictions associated with each class.

There is a $5 per page filing fee plus a $60 minimum capital stock fee if your corporation's capital stock does not exceed $10,000, for a minimum filing fee of $65 for one-page articles. Your corporation's capital stock is the number of shares authorized in your articles multiplied by the par value of these shares. The stock fee increases if your corporation's capital stock exceeds $10,000, as follows:

• If the capital stock is $10,000-$25,000, the capital stock fee is $100
• If the capital stock is $25,000-$50,000, the capital stock fee is $150
• If the capital stock is $50,000-$75,000, the capital stock fee is $225
• If the capital stock is $75,000-$100,000, the capital stock fee is $300
• If the capital stock is more than $100,000, the capital stock fee is $300, plus an additional $3 for each $1,000 in excess of $100,000

Nebraska law requires publication of a notice of incorporation for three successive weeks in a general circulation newspaper in the county where the corporation's principal office is located, and proof of publication then submitted to the Secretary of State.

Registered Agent and Office

Nebraska corporations must have a registered in-state agent-the person or office designated to receive official state administrative and legal correspondence on behalf of the corporation. The registered agent must have a business office that is the same as the registered office and must be either an individual state resident or a corporation authorized to conduct business in the Cornhusker State.

The registered office may be the same as any of the corporation's places of business.

Bylaws

The incorporators or board of directors should adopt the corporation's bylaws at their first meeting, insuring that there is no conflict with the corporation's articles of incorporation or state law. A corporation is required to keep its bylaws available at its primary executive office, but it is not required to file them with the state. They should also keep them updated as time goes on. Bylaws set forth the corporation's basic operating principles from both the managerial and legal perspectives, and should include (as a minimum):

• What authority directors have, how many there are, and how long they serve
• Duties and responsibilities of officers and how long they serve
• How consensus on major decisions is reached, both with and without meetings
• How, when, and where shareholders' and directors' meetings are held
• How the corporation's stock is issued
• Requirements for publishing annual financial information to shareholders

Directors and Officers

The board of directors has the responsibility of making the corporation's major decisions. The board of directors consists of one or more individuals as specified in the articles of incorporation or bylaws. If the board has the power to establish or change the number of directors, the board may only increase or decrease by 30 percent or less the number of directors last approved by the shareholders. Only the shareholders may increase or decrease by more than 30 percent the number of directors last approved by the shareholders.

Officers of the company must be either listed in the bylaws or elected by the board. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board of directors. At least one officer must authenticate the corporation's records, as well as prepare the minutes of directors' and shareholders meetings. An officer may hold more than one office in the corporation, unless otherwise prohibited by law, the corporation's articles of incorporation, or the bylaws.

Required Reports

Nebraska corporations must file a biennial (every two years) report with the Nebraska Secretary of State by March 1 of every even-numbered year. The report must be current as of January 1 of the filing year and must include:

• The name of the corporation
• The street address of the corporation's registered office in Nebraska
• The name of the corporation's registered agent there
• The street address of the corporation's principal office
• The names and street addresses of the corporation's directors and principal officers (president, secretary, and treasurer)
• A brief description of the nature of the corporation's business
• The amount of paid-up capital stock
• Any changes in the preceding information since the last biennial report

The corporation must provide its shareholders an annual financial statement within 120 days after the close of each fiscal year. These statements must include a year-end balance sheet, an income statement for that year, and a statement of changes in shareholders' equity for that year (unless this information is stated elsewhere in the financial statements).

The corporation must also report in writing any expenses advanced to a director, as well as any issued or authorized promissory notes or promises to render services in the future, with or before notice of the next shareholders' meeting.

Taxes

Nebraska imposes an annual corporation license tax, for which the minimum payment is $50.

Additionally, "S corporation" status is recognized by the State of Nebraska. A "subchapter S" corporation (frequently referred to as an "S corp") is treated as a pass-through entity for tax purposes in the same way as a sole proprietorship or partnership. The S corp does not file a tax return on its own behalf; instead, all tax-related data for the S corp is filed as part of the owner's individual income tax.