How to Form a Professional Corporation in Nebraska (2024 Guide)

Steve Bennett
Business Formation Expert  |   Fact Checked by Editorial Team
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Forming a Professional Corporation in Nebraska

If you would like to start and learn how to form a corporation in Nebraska, there are a few things that you should do now. However, in a professional corporation, professionals must create a special organizational structure to establish a professional or service corporation. Among the appropriate professions to organize a professional corporation in Nebraska are accountants, physicians, engineers, architects, and attorneys.

Forming a professional corporation in Nebraska or any business organization needs a certain number of steps. In this article, Webinarcare Editorial Team is going to share those steps. Keep in mind that these are general procedures. Depending on local law, it may be modified. For instance, your professional corporation may be subject to city or county-based rules.

What is a Professional Corporation in Nebraska?

A professional service corporation (PSC), often known as a professional corporation (abbreviated as PC), is a particular type of organization that is permitted by state law to allow owners of specifically licensed professions to practice in the Nebraska. A professional corporation’s owner is answerable for their own negligence or wrongdoing but is not held personally liable for the actions of other owners. The abbreviation PC or P.C. is frequently used to denote professional corporations.

This structure allows professionals to enjoy some of the benefits and protections of a traditional corporation while maintaining their professional status and abiding by the regulations of their respective licensing boards.

LegalZoom is the recommended corporation formation if you are thinking of forming a professional corporation from scratch. However, you can always start an LLC in Nebraska, if you changed your mind.

WEBINARCARE EDITORIAL TEAM

How to Form a Professional Corporation in Nebraska

To form a Professional Corporation in Nebraska for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an Biennial report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Nebraska, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

To provide your service, you must be qualified and have a license. In most cases, you can now form a professional corporation after finishing your studies, passing the exam, and receiving your license. If you work in an industry that does not provide a license or professional certification, you should consider starting an LLC or corporation.

Step 2: Name your Professional Corporation in Nebraska

After you have decided to form a professional corporation in Nebraska, you must choose a name for your corporation. Here are some pointers to consider when naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • Limit of restricted words that need a license.
  • A unique name is needed with no match
  • No confusion with a government entity name.

In Nebraska, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 120 days. You must file a name reservation application in the Nebraska Secretary of State to keep the name.

If not already present, a professional corporation, professional association, service corporation, or professional service corporation must be included in the name. You may register your business under a different legal name if your preferred legal name is unavailable. Once you’ve decided on a name, you can apply for Nebraska DBA (doing business as). This way, you can run a clinic or law firm under your name.

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Step 3: Choose the Nebraska Registered Agent

The next step in forming a professional corporation is hiring a Registered Agent, who accepts legal paperwork for your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Nebraska. Forming a professional corporation for your service will be easier if you have Registered Agent in Nebraska.

Alternatively, you can serve as your own Registered Agent if you have the time. Usually, in Nebraska, a Registered Agent costs is ranging from $50 – $150. To make it easier, you can hire Nebraska Registered Agent Services for your professional corporation.

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Step 4: File the Articles of Incorporation in Nebraska

After you hire a Registered Agent to form a professional corporation, the next step is to file the Nebraska Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information, should be written. Include the names of all co-owners as well. All owners must demonstrate that they have the necessary licenses to practice the profession in question.

Filing the Articles of Incorporation in Nebraska may be done with two method that is filing online, or in-office. The Articles of Incorporation fee may vary from different state. However, in Nebraska, it costs $30 for in office filing and $25 for online filing. Create a subcriber account/Log in to the SOS site, get the online eDelivery form, fill it, and submit online or go to office to do the proces.. For offline filing, there’s no offline method of filing the documents.

Step 5: Write an Operating Agreement in Nebraska

An operating agreement in Nebraska is a document that contains all of your company’s organizational details. It is optional to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

Step 6: Designate the PC Board of Directors in Nebraska

The next step is to form the first board of directors for your PC in Nebraska. All of the initial directors must provide the owner with their contact information. The owner must keep records and submit them by the Nebraska Secretary of State. As a shareholder and owner, you must ensure that a provision for appointing a new director is included in the By-laws. In Nebraska, you must have One directors in forming your Professional Corporation.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

Creating comprehensive corporate bylaws requires specific knowledge about the company, its structure, and operations. However, I can provide you with a general outline of what corporate bylaws usually include. It is crucial to consult with Nebraska Business Attorney or a legal expert to ensure that your bylaws comply with the laws and regulations governing your jurisdiction and industry.

  • Name and Purpose of the Corporation
  • Registered Office and Agent
  • Shareholders
  • Board of Directors
  • Officers
  • Committees
  • Indemnification and Insurance
  • Conflict of Interest
  • Records and Reports
  • Amendments
  • Miscellaneous

Step 8: Hold the First Board of Directors’ Meeting

Gather the board of directors for the first meeting after drafting the corporate bylaws. This meeting will conclude with the appointment of directors to manage the company’s daily operations, approval of the bylaws, selection of the corporation’s financial reporting year, and approval of the stock issue. Minutes should be taken at all board meetings and kept with the company’s records.

Step 9: Request an EIN in Nebraska.

After the operating agreement’s documentation, you should get or request an Employer Identification Number (EIN) in Nebraska. The tax ID for your professional corporation will be an EIN. The Internal Revenue Service can provide an EIN (IRS). It has nine digits and is comparable to a social security number. Nevertheless, EIN is different from SSN. Only business-related tasks, primarily filing general taxes, are performed using it. The form needs to be filled out and submitted online to the IRS.

The application of an EIN in Nebraska can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in several ways. It will give your professional corporation the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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Step 10: Open a Bank Account and Prepare for Taxes.

You should open a business bank account as soon as you have applied for and received your Employer Identity Number because you will use this account for yourself, your clients, and your staff. Check out the Best Banks in Nebraska for you to decide on which bank you are going to open an account.

Due to your organization’s increased legality and liquidity, having a US business bank account may make conducting business in Nebraska easier. Most banks require an EIN for businesses other than sole proprietorships to open a business bank account. Also, keeping your accounts separate will prevent you from merging your personal and business finances. Also, filing taxes is simpler when you have an EIN. You can expect to pay employee and corporate taxes when you form a professional corporation.

Step 11: Get a Business License in Nebraska

Before your professional corporation operates in Nebraska, you must have Nebraska Business License first. A business license is a formal document issued by a state government agency that allows you to conduct business in the geographic area governed by that agency. The cost of business licenses and permits in Nebraska ranges from $50 – $300. You must check with the local authorities to see if any special licenses or permits are required.

Step 12: File Your Taxes in Nebraska

Finally, you’ve arrived at the final process. Remember to file your taxes when you have obtained a business license and are ready to begin operations. To avoid a large tax bill, you should begin paying taxes quarterly as soon as possible. Each state has different tax requirements. Start examining the Nebraska tax classification for the taxes that an LLC in Nebraska must pay.

Main Characteristics of a Professional Corporation

In forming a Professional Corporation, the main characteristics must be distinguished before forming it. These are the general characteristics of forming a Professional Corporation in Nebraska.

  • Limited Liability Protection: A professional corporation provides its owners, shareholders, or members limited liability protection like a regular corporation. This means the shareholders’ personal assets are generally protected from business debts, obligations, and lawsuits, except in malpractice or professional negligence cases.
  • Nebraska Licensing Requirements: All shareholders must typically be licensed professionals in the same field in a professional corporation. The corporation must also comply with specific state regulations and licensing requirements that govern the profession.
  • Governance and Management: A professional corporation is governed by a board of directors, who the shareholders elect. The board appoints officers to manage the day-to-day operations of the corporation. All directors and officers must be licensed professionals in the same field as the corporation.
  • Taxation: Professional corporations are taxed as C corporations, where the corporation pays taxes on its income, and shareholders pay taxes on dividends received from the corporation. However, some professional corporations may be eligible for S corporation status, allowing pass-through taxation. Income, losses, deductions, and credits flow to the shareholders, who report this information on their income tax returns.
  • Restrictions on Ownership and Transfer of Shares: Professional corporations often restrict the ownership and transfer of shares to ensure that only licensed professionals in the same field can become shareholders. This helps maintain the professional nature of the corporation and adheres to state licensing requirements.
  • Malpractice Liability: While a professional corporation provides limited liability protection for general business debts and obligations, it does not shield shareholders from liability for their own malpractice or professional negligence. Shareholders can still be personally liable for their actions in providing professional services.

In summary, a professional corporation is a specialized corporate structure designed for licensed professionals, offering limited liability protection and a formal governance structure while adhering to state licensing requirements and regulations.

Maintain Professional and Business License in Nebraska

You must maintain or renew your professional license regularly now that you have established your professional corporation. Even if your company is well-established, it is only meaningful if you have a valid operating license. And it makes no difference if your professional license is still valid for a year or two, but your business license has already expired.

Make time at least once a year to check the status of your licenses. You won’t miss anything important this way. You can address any issues that arise.

Filing Biennial Report in Nebraska

In Nebraska, you must submit a report. The owners’ and Registered Agent’s names and contact details are listed in the Biennial Report. Also, it should include all of your yearly financial activity. You must submit the report every 2 years (1st April odd numbered years) in the Nebraska Secretary of State.

FAQs

What is a professional corporation in Nebraska?
A professional corporation in Nebraska is a type of business entity formed by professionals such as attorneys, accountants, architects, and doctors.
How do I form a professional corporation in Nebraska?
To form a professional corporation in Nebraska, you must file Articles of Incorporation with the Nebraska Secretary of State.
How much does it cost to form a professional corporation in Nebraska?
The filing fee for Articles of Incorporation in Nebraska is $100 for domestic entities.
What are the benefits of forming a professional corporation in Nebraska?
Forming a professional corporation in Nebraska offers liability protection to the corporation’s shareholders or members. Additionally, it may provide tax benefits.
Can a nonresident of Nebraska form a professional corporation in Nebraska?
Yes, a nonresident can form a professional corporation in Nebraska but needs to appoint an in-state registered agent.
Do I need a lawyer to form a professional corporation in Nebraska?
While it is not required to have a lawyer to form a professional corporation in Nebraska, consulting with an attorney before and during the process is wise.
Is a business license required for a professional corporation in Nebraska?
Yes. you need a business license in Nebraska for any corporation, including a professional corporation.
What is the minimum number of shareholders required to form a professional corporation in Nebraska?
In Nebraska, there must be at least one shareholder to form a professional corporation.
Is there a limit to the number of shareholders in a professional corporation in Nebraska?
The limit on the number of shareholders in a professional corporation in Nebraska depends on the profession.
Can a professional corporation in Nebraska have non-licensed shareholders?
No, non-licensed shareholders are not allowed in a professional corporation in Nebraska.
Can the shareholders of a professional corporation in Nebraska be sued for the corporation’s actions?
The shareholders of a professional corporation in Nebraska may have limited liability, depending on the profession.
Does a professional corporation in Nebraska need a board of directors?
A professional corporation in Nebraska must have a board of directors.
Are doctors required to form a professional corporation in Nebraska?
No, doctors are not required to form a professional corporation in Nebraska but may be another corporation type.
When are taxes due for a professional corporation in Nebraska?
The due date for professional corporation taxes in Nebraska is March 1 for corporations with a fiscal year ending in December and April 15 for corporations with a fiscal year ending before September.
Are there any annual reports required to be filed for a professional corporation in Nebraska?
Yes, professional corporations in Nebraska have to file annual reports with the Secretary of State.
Is a registered agent required for a professional corporation in Nebraska?
Yes, a registered agent is required for a professional corporation in Nebraska.
Can I form a single-member professional corporation in Nebraska?
No, professional corporations in Nebraska cannot be owned by only one shareholder.
Does share ownership in a professional corporation in Nebraska have any effect on liability or ownership rights?
Owner share stocks in a professional corporation of Nebraska effect ownership and limited liability rights.
Is insurance necessary for a professional corporation in Nebraska to protect against liability claims?
Insurance is strongly recommended as part of the protection against liability claims in Nebraska.
Should I incorporate in a state that is not Nebraska to take advantage of certain benefits?
While it may be possible to incorporate outside of Nebraska, it is usually best if they need to consider the requirements and regulations.
How long does it generally take to form a professional corporation in Nebraska?
It generally takes 1–3 weeks to form a professional corporation in Nebraska.
Is there a difference between an LLP and a Professional Corporation in Nebraska?
Professional corporation owners can apply for certain tax benefits that are unavailable to their counterparts owning LLP.
How is liability structured in a professional corporation in Nebraska?
The Professional Services Corporation Act governs professional corporation regulation and restricts personal liability exposure for shareholders, officers or employees.
Can a professional corporation in Nebraska merge with another corporation or entity?
Yes, professional corporations in Nebraska are allowed to merge with another corporation or entity.
Can professionals hold ownership in multiple professional corporations in Nebraska?
Yes, a professional can be an owner of multiple professional corporations in Nebraska.
What is the hourly billing rate for Nebraska professional corporation owners?
It varies, depends on a lot of factors such as profession, location, and experience of the owner.
Is it necessary to get professional liability insurance for a professional corporation in Nebraska?
Yes, It’s advisable to have professional liability insurance to shield the corporation or shareholders from claims alleging poor service or neglect.
Are there any requirements to file annual financial reports for a professional corporation in Nebraska?
Annual financial reports are not required to submit but corporations must submit their annual reports to the Secretary of State.
Can a Nebraska professional corporation provide limited or passive business income?
Passive income such rental capacity or earning interest on money accounts would be feasible in a certain limit.
Does Nebraska law mandate hiring non-shareholders?
Professional corporations in Nebraska don’t have to hire non-shareholder employees unless laws mandate non-shareholder licensure.

Also Read

How to Save Money While Forming Nebraska Professional Corporation

First and foremost, it is vital to start with a well-defined business plan. A meticulously crafted plan serves as a roadmap, guiding you through the intricacies of forming a professional corporation. By clearly outlining your vision, objectives, and target market, you can prevent costly mistakes and unnecessary expenditures down the road. Additionally, conducting thorough market research enables you to identify potential challenges and pitfalls, allowing you to allocate resources wisely.

Another potential area for cost savings lies in selecting the right business structure for your professional corporation. Depending on your unique circumstances, you may benefit from choosing a limited liability company (LLC) instead of a traditional professional corporation (PC). Unlike PCs, LLCs offer flexibility, reduced administrative burdens, and potential tax advantages. Consulting with a competent attorney or business advisor will help you assess the pros and cons, choose the right structure, and save money from the inception of your endeavor.

Moreover, when it comes to procuring necessary licenses and permits, being well-informed can help streamline the process and minimize expenses. Nebraska, like most states, requires certain professional licenses to operate legally, while adhering to specific regulations. By thoroughly researching and understanding all legal requirements, you can avoid potential fines or delays caused by missing documentation. It may be worthwhile to seek guidance from professionals who specialize in these matters to ensure compliance while minimizing costs.

Furthermore, leveraging technology can prove to be an affordable and efficient way to manage several aspects of forming a professional corporation. Utilize user-friendly software for legal documentation, accounting processes, and data storage. By doing so, you can save on administrative costs, streamline operations, and focus on your core business activities. Various cloud-based solutions are available at affordable prices, allowing you to access critical files and applications from anywhere, reducing the need for expensive physical infrastructure.

Collaboration and sharing resources with other professionals or businesses can unlock significant cost-saving opportunities. Consider joining professional associations that offer shared office spaces or co-working environments. Sharing office equipment, administrative staff, and associated expenses can tremendously reduce overhead costs, especially during the initial stages of formation. Additionally, participating in community-oriented events and networking with other professionals can foster synergistic partnerships, opening doors to future collaborations and potential cost reductions.

Finally, it is crucial to make informed decisions when outsourcing specialized services. For tasks that require expert assistance, such as legal compliance, bookkeeping, or website development, it may be cost-effective to engage the services of experienced professionals or agencies. By having a clear understanding of your immediate needs and selecting appropriate vendors, you can avoid unnecessary expenditures and ensure that the selected services align with your long-term goals.

Forming a professional corporation in Nebraska can be an exciting and rewarding journey. By focusing on developing a sound business plan, carefully choosing the appropriate business structure, understanding legal requirements, leveraging technology, engaging in collaborative partnerships, and making informed outsourcing decisions, you can minimize expenses, maximize savings, and position your corporation for long-term success. Remember, every penny saved during the formation process adds to your financial bedrock and increases your viability in the industry. So, plan diligently, seize opportunities wisely, and chart a course towards a prosperous future.

Conclusion

In conclusion, forming a professional corporation in Nebraska is a strategic decision for licensed professionals who seek to combine their expertise and services under a single corporate entity. This business structure offers limited liability protection, a formal governance structure, and compliance with state licensing requirements. However, it also comes with certain restrictions on ownership, transfer of shares, and personal liability for professional malpractice. By carefully considering the advantages and disadvantages of a professional corporation, professionals can determine whether this structure aligns with their business goals, regulatory requirements, and risk management needs, ultimately contributing to a more organized, secure, and compliant professional practice.

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