NEBRASKA

Why Form a Limited Liability Company (LLC)?


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The Nebraska Business Taxes Your LLC Will Pay

Business taxes are a fact of life, and your NE LLC will need to pay a variety of taxes to both the federal and Nebraska governments. We’ll cover all the main taxes in Nebraska including self-employment, payroll, federal, Nebraska state tax and Nebraska sales tax.

If you want help with your taxes, Incfile provides a complete Business Tax Filing service.

How Your Nebraska LLC Will Be Taxed

The profits of a Nebraska LLC are not taxed at the business level like those of C Corporations. Instead, taxes for a Nebraska LLC work as follows:

  • Nebraska LLC owners pay self-employment tax on business profits.
  • Nebraska LLC owners pay NE state tax on any profits, less state allowances or deductions.
  • All LLC owners pay federal income tax on any profits less federal allowances or deductions.
  • Some NE LLCs pay Nebraska sales tax on products.
  • Employers pay payroll tax on any salaries they pay to employees.
  • Employees pay federal, state and payroll tax on their earnings.

Items 1, 2 and 3 are taxed as “pass-through” income for any LLC owners, managers or members who receive profits from the business. Any profits are reported on federal and Nebraska personal tax returns, and that’s where you will pay those taxes.

Nebraska State Income Tax Payable on LLC Earnings

As a Nebraska business owner, you will need to pay NE state tax on any money you pay to yourself. These earnings flow through to your personal tax return, which is where you will pay Nebraska income tax. You will be taxed at the standard rates for Nebraska state taxes, and you will also get to apply regular allowances and deductions.

Any salaried employees will also need to pay personal Nebraska state taxes.

The Nebraska state tax rates are between 2.46 and 6.84 percent, depending on earnings.

Get details on the Nebraska state tax here.

Nebraska Sales Taxes

If you sell physical products or certain types of services, you may need to collect sales tax (also known as sales and use tax) and then pay it to the NE Department of Revenue. Nebraska sales tax is collected at the point of purchase. Nebraska sales tax rates do vary depending on the region, county or city where you are located.

You will typically need to collect Nebraska sales tax on:

  • Tangible, personal property and goods that you sell like furniture, cars, electronics, appliances, books, raw materials, etc.
  • Certain services that your Nebraska business might provide

Most states do not levy sales tax on goods that are considered necessities, like food, medications, clothing or gas.

Get details on the Nebraska sales tax here.

Nebraska Sales Tax Rates

Sales tax rates do vary between states, counties and cities. Typically, the state will set a base sales tax rate, then specific counties and cities may levy small additional sales tax amounts on top of that.

Federal Taxes for Your Nebraska LLC: Self-Employment and Income Taxes

There are a couple different federal taxes that every LLC will need to pay, including Nebraska LLCs. These are self-employment tax and federal income tax, which are taxed as “pass-through” income via your tax return forms.

Nebraska LLC Federal Self-Employment Tax

All Nebraska LLC business members or managers who take profits out of the LLC will need to pay self-employment tax. This tax is also known as FICA, Social Security or Medicare tax. It applies to all the earnings you withdraw from your Nebraska business. The current self-employment tax rate is 15.3 percent.

You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe. Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:

  • On profits of $40,000, you would pay self-employment tax of $6,120.
  • On profits of $70,000, you would pay self-employment tax of $10,710.
  • On profits of $90,000, you would pay self-employment tax of $13,770.
  • On profits of $100,000, you would pay self-employment tax of $15,300.

Pay Less Self-Employment Tax by Treating Your Nebraska LLC as an S Corporation

The Internal Revenue Service allows LLCs to ask to be treated as an S Corporation for tax purposes. This can help you reduce the amount of self-employment tax that you pay by declaring some of your income as salary and other income as distributions or withdrawals.

You can do this by making an “S Corporation Tax Election” with the IRS using a form known as Form 2553. We can file your Form 2553 with the IRS on your behalf.

Incfile Form 2553 S Corporation Tax Election for an LLC service

Speak to your accountant for more information on reducing your Nebraska LLC self-employment tax through an S Corporation tax election.

Nebraska LLC Federal Income Tax

You must also pay regular federal income tax on any earnings you take out of your Nebraska LLC. The amount of income tax you pay depends on your earnings, current income tax brackets, deductions and how you file.

You only pay federal income tax on your Nebraska LLC profits that you take out of the business, less certain deductions and allowances. This includes your tax-free amount, plus LLC business expenses and other deductions for areas such as healthcare and some retirement plans. Speak to your accountant for more information.

Employer and Employee Taxes for Your Nebraska LLC

If you pay employees, there are some slightly different tax implications. Speak to your accountant to get clear guidance for your own unique situation.

Nebraska LLC Employer Payroll Tax Withholding

All employers must collect and withhold payroll tax from their employees when they receive their salaries. You would normally withhold 7.65 percent of the taxable salary that you pay to your employees.

Nebraska LLC Federal and State Tax Withholding

You may also choose to withhold federal and Nebraska state income tax on the wages you pay to employees. Speak to your accountant for more information.

Employees May Need to File Tax Returns

Regardless of whether you withhold federal and Nebraska state income tax, your employees may need to file their own tax returns.

Nebraska LLC Employee Insurance and Other Requirements

You may also need to pay insurance for any employees, like employee compensation insurance or unemployment tax. There will also be other requirements you have for employees.

Get more requirements from the Nebraska Department of Labor website.

Other Taxes and Duties for Your Nebraska LLC

Depending on the industry you are in, your Nebraska LLC may be liable for certain other taxes and duties. For example, if you sell gasoline you may need to pay a tax on any fuel you sell. Likewise, if you import or export goods you may need to pay certain duties. Speak to your accountant about any other taxes you may need to withhold or pay.

Estimated Taxes for Your Nebraska LLC

Most Nebraska LLCs will need to pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. The most common types of estimated tax are:

  • Federal income tax
  • Federal self-employment tax
  • Nebraska state tax

Most Nebraska LLCs will pay estimated taxes four times a year. Speak to your accountant for more information.

FAQs on Nebraska LLC Business Taxes

Does Nebraska Have Sales Tax?

Yes. Nebraska does have a sales tax, which may vary among cities and counties.

Does Nebraska Have a State Tax?

Yes. Nebraska does have a general state income tax. You can find more information above.

Do I Need to Pay Estimated Taxes?

Yes. In most cases you must pay estimated taxes on your Nebraska tax, federal income tax and self-employment tax. Speak to your accountant for more information.

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What are the fees and requirements to form a business in Nebraska?

Filing Time and Price

The state charges this amount to file a new business entity. This fee goes directly to the Secretary of State.

State Fee State Filing Time Expedited Filing Time
$107 9 Business Days 2 Business Day

Compliance Requirements

This report is mandatory and must be filed within the specified time frame in order for the entity to remain in good standing with the state. Failure to file this report can lead to the company being revoked or administratively dissolved.

Annual Report

Frequency: Biennially

Due Date: April 1st of each odd-numbered year.

Filing Fee:$0

Publication Requirement:Domestic Nebraska limited liability companies must publish a notice of organization, amendment, merger or conversion for three successive weeks in some legal newspaper of general circulation, near the designated office of the limited liability company. The notice of organization shall show the name of the limited liability company, the street address of the designated office and the general nature of the business to be transacted.

(We do not assist in the filing of the Publication Requirement)

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