Nebraska Sole Proprietorship

How to Become a Nebraska Sole Proprietor

In Nebraska, becoming a sole proprietor is straightforward. There’s no formal setup or fees. Just start working, and you’re in business. However, it’s wise to consider some extra steps along the way, even though they’re not mandatory. Many sole proprietors find them helpful.

DBA Acquisition

A Nebraska doing business as (DBA) name is a crucial part of many sole proprietorships, as it enables you to use an assumed name for your business, rather than your own personal name. The advantages of acquiring a DBA start with image ― most customers feel that an assumed name is more professional and trustworthy than doing business with a company that uses its owner’s personal name instead.

That said, sole proprietors can sign up for a business bank account using their DBA name, which is another step that goes a long way toward making customers feel more comfortable doing business with you.

In Nebraska, DBAs are sometimes referred to as “Trade Names” and are processed by the Nebraska Secretary of State. To acquire one, you  must first consult the state Business Search database and find a suitable name that is available.

When you’ve settled on a name, you must complete the Application Registration of Trade Name which can be found as a PDF or online using Nebraska’s One-Stop business registration system.

For more information on how to file for a trade name, we suggest you consult our full guide.

Determine Taxation Requirements

Sole proprietors without employees usually don’t need to acquire a federal tax ID number (EIN), because as a one-person business, you can typically just use your own social security number for most things an EIN is used for. Still, if you would rather not use your SSN for privacy purposes, it would be a good idea to get an EIN regardless.

Beyond that, the nature of your business will determine which taxes apply to you as a sole proprietor.

In Nebraska, the type of business your sole proprietorship engages in will ultimately determine  which taxes it will be required to pay at the end of the year. A few of the most common taxes come in the form of sales tax and use tax, though there is a wide amount of variation. In order to discover which taxes are applicable to your business, you’ll need to register your sole proprietorship with the Nebraska One-Stop Business Registration.

Obtain Business Licenses and Permits

There isn’t a requirement in Nebraska for sole proprietors to acquire a general business license, but depending on the nature of your business you may need other licenses and/or permits to operate in a compliant fashion.

Like most states, Nebraska has a huge range of licenses that are specific to business types, local regulations, and what type of products or services your entity sells. To discover which state licenses will be necessary for your Nebraska sole proprietorship, you’ll need to use the Nebraska Department of Labor’s licensing platform, NebraskaAccess.

Other specific licenses and permits may be required in accordance with local regulations, building permits, zoning clearances, and other such restrictions.

In addition, you should check to see if your business needs any licenses or permits on the local level.

While some cities will have no additional permits necessary, some will require additional, specific certifications. To be sure your sole proprietorship meets all requirements, consult the government website of the city or county in which you plan to operate business and ask what local licensing requirements may be applicable.

What Is a Nebraska Sole Proprietor?

As opposed to a corporation or Nebraska limited liability company (LLC), the sole proprietorship is not a legal business entity. The sole proprietorship is a one-person business that is not considered to be a distinct entity from the person who owns it, and it is frequently operated using the owner’s personal name.

Here are the three main things you need to know:

Tax Responsibilities

Because there’s no distinction between the owner and the business itself, sole proprietors don’t need to file business tax returns ― they instead simply claim any business profits or losses on their personal tax returns.

Contracts

Sole proprietors are allowed to sign contracts using their personal name, and along those same lines, customers can write checks to the business by using the sole proprietor’s name.

More Flexible

The other big difference between sole proprietorships and more formal business structures is the fact that sole proprietors are allowed to commingle business and personal assets as much as they want to. With LLCs and corporations, ownership is required to keep their assets separate from those of the company. The downside of this aspect for sole proprietors is that if your business is sued, creditors are free to pursue your personal assets like your house, car, personal bank accounts, etc. For corporations and LLCs, creditors are limited to your business assets.