How to Start a Contracting Business in Nebraska

Register before you start, not after you win the job

The first sentence that matters is short. Neb. Rev. Stat. 48-2104(1) says "Before performing any construction work in Nebraska, a contractor shall be registered with the department," and the Department of Labor restates it without qualification: "All contractors doing business in Nebraska must register with the Nebraska Department of Labor." There is no grace period written into the sentence and no threshold inside it. The exemptions come next, in subsection (2), and they are narrow.

The definition of who is caught is deliberately broad. Neb. Rev. Stat. 48-2103(3) reaches any individual, firm, partnership, limited liability company, corporation or other association "engaged in the business of the construction, alteration, repairing, dismantling, or demolition" of buildings, roads, bridges, sewers, water systems, streets, airports, dams, pipelines and transmission lines, and expressly extends to subcontractors and to anyone who provides or arranges labour. Neb. Rev. Stat. 48-2103(2) defines construction as work "on real property and annexations, including new work, additions, alterations, reconstruction, installations, and repairs."

Read those two together and the practical answer for a new business is that repair work counts, subcontracting counts, and arranging for someone else to do the work counts. The Department of Labor phrases it as anyone "who engages in or arranges for work on real property other than their own property." A contractor operating under more than one business name needs a separate registration number for each name, which Neb. Rev. Stat. 48-2104 states directly.

• Registration is with the Department of Labor, before any construction work begins.
• Subcontractors are covered, not just prime contractors.
• Repairs and alterations count as construction, not only new build.
• Each business name you trade under needs its own registration number.
• Work on your own property is outside the requirement.

Official sources: Neb. Rev. Stat. 48-2104 (Contractor Registration Act: registration required); Neb. Rev. Stat. 48-2103 (Contractor Registration Act: terms, defined); Nebraska Department of Labor: Contractor Registration - Who Needs to Register

Are you under the $5,000 line, and does it help you as much as it sounds?

Neb. Rev. Stat. 48-2104(2) carves out two groups: "Any person who performs work or has work performed on his or her own property" and "Any person who earns less than five thousand dollars annually for construction services." The second one is the useful one for a side business, and it is worth reading precisely. It is an annual earnings test measured on what you earn, not a per-contract value test, so five $1,200 jobs in a year puts you over it while one $4,000 job does not.

The statute then closes the door people try to walk through. The same subsection provides that the exemption "does not exempt a contractor from withholding requirements under the Nebraska Revenue Act of 1967." Being under the registration threshold does not put you outside the tax system, and it does not remove your obligations as an employer if you have one.

There is a second, quieter cost to staying unregistered that no statute spells out for you. The Department of Revenue requires that "All contractors making payments to other contractors (subcontractors), who are not listed in the Database, are required to withhold 5% of all payments to the subcontractor." If your work comes through other contractors rather than direct from owners, sitting under the exemption means every one of those contractors is required to hold back five percent of what they pay you. The exemption saves you a registration fee and costs you cashflow on every invoice.

Official sources: Neb. Rev. Stat. 48-2104 (Contractor Registration Act: registration required); Nebraska Department of Revenue: Nebraska Construction Contractors FAQs

The three contractor options, and why the default one is the expensive surprise

Nebraska does not let a contractor simply pay sales tax and move on. Every contractor, resident and nonresident, elects one of three options for how sales and use tax on building materials and fixtures is satisfied, and the Department of Revenue’s general guide is explicit that the election lives inside the Department of Labor registration screen, not on a tax return: contractors "choose a contractor option by completing the Department of Labor’s online Contractor/Subcontractor Registration Application."

Option 1 treats you as a retailer. The guide states that "Option 1 contractor labor charges that are separately stated on the billing invoice are not taxable," that Option 1 contractors "must continue to collect sales tax on the amounts billed to other contractors and project owners for building materials they annex during the project," and that an Option 1 contractor who "only charge[s] one amount for building materials and contractor labor must continue to collect sales tax on the total amount charged." Option 1 contractors buy materials tax free on a Form 13 resale certificate and need a Nebraska Sales Tax Permit.

Option 2 treats you as the consumer. Labour charges are not taxable, and the guide states Option 2 contractors "will continue to pay sales tax on their purchases of building materials and fixtures," remitting consumer’s use tax where a supplier did not charge it, such as an out-of-state or internet purchase. Option 3 sits between the two: materials are bought tax free on a Form 13, and the contractor "will continue to remit use tax on building materials and fixtures withdrawn from inventory," computed "at the rate in effect at the time and place of withdrawal from inventory."

Here is the trap. The guide states in terms that "Contractors who do not register and elect a contractor option will be treated as a retailer under Option 1." A new contractor who never opened the option screen is not in a neutral position. They are an Option 1 retailer who has been failing to collect sales tax from their customers on annexed building materials. Changing your mind later does not clean that up going forward only in the way people expect, either: the guide states that when you change your option, "The new contractor option applies to all contracts in progress and also to all new contracts."

Two more things the guide settles that contractors argue about. Tools, equipment and supplies are never covered by the option: "Contractors are the consumers of all tools, equipment, and supplies used in completing their construction projects, including any project for an exempt entity," with hammers, sandpaper, form lumber, scaffolding, backhoes, cement mixers and safety barriers named as examples. And working for an exempt entity does not by itself make your purchases tax free; the guide requires a Purchasing Agent Appointment, Form 17, "obtained before any materials are annexed," and says it cannot be used for tools or equipment.

Official sources: Nebraska Department of Revenue: Nebraska Taxation of Contractors - General Information (Guide 6-346); Nebraska Department of Revenue: Nebraska Construction Contractors FAQs; Nebraska Department of Revenue: Important Information for Contractors Performing Construction Services in Nebraska

Forming the company: the filing, the newspaper, and the report that is not annual

The entity and the registration are two separate records at two separate agencies, and neither one substitutes for the other. The Secretary of State forms the company; the Department of Labor registers you as a contractor. The Secretary of State publishes filing fees of $110 in office or $100 online for a domestic LLC certificate of organization, the same $110 or $100 for domestic corporation articles of incorporation, and the same $110 or $100 for a trade name registration.

Nebraska then adds a step most states dropped decades ago. Neb. Rev. Stat. 21-193 requires notice of an LLC’s organization, and of amendments, mergers, conversions and domestications, to be "published three successive weeks in some legal newspaper of general circulation near the designated office of the limited liability company," with proof of publication filed with the Secretary of State. That is three weeks of newspaper notice and a follow-up filing, and it is easy to form the entity online and never learn the requirement exists.

The recurring filing is biennial, not annual, and the year depends on your entity type. The Secretary of State states that LLC biennial reports "are due in the odd numbered years by April 1, delinquent June 16," while corporation biennial occupation tax reports "are due in the even numbered years by March 1, delinquent April 15." A contractor who converts from an LLC to a corporation therefore also moves their reporting year, which is exactly the sort of change that gets missed.

Official sources: Nebraska Secretary of State: Forms and Fee Information; Nebraska Secretary of State: New Business Information; Neb. Rev. Stat. 21-193 (Nebraska Uniform Limited Liability Company Act: notice; publication required); Nebraska Secretary of State: Annual/Biennial Reporting

Insurance, employees and the things that revoke your registration

Nebraska ties your registration to your workers’ compensation coverage more tightly than most states. The Department of Labor requires that "All contractors with one or more employees must provide a current Workers’ Compensation Certificate of Insurance (ACORD 25)" with the Department listed as certificate holder, and states that contractors whose coverage has expired are removed from the registered list until updated documentation is submitted.

Neb. Rev. Stat. 48-2110 turns that into an automatic consequence rather than a discretionary one. Where the commissioner receives a notice of cancellation of workers’ compensation coverage, the commissioner "shall revoke the registration as of the time of cancellation unless the contractor provides a new certification of insurance prior to the cancellation date." A lapse in your policy is therefore a lapse in your right to work, backdated to the cancellation, not to the day anyone noticed.

The underlying coverage rule is in the Workers’ Compensation Act itself. Neb. Rev. Stat. 48-106 applies the Act to the State of Nebraska, to state agencies, and "to every resident employer in this state and nonresident employer performing work in this state" with one or more employees, with named exceptions for interstate railroads, domestic servants in private residences, and certain agricultural employment. Construction is not on the exception list. We take that from the statute rather than from the Workers’ Compensation Court, whose site would not open to us on the day this was written.

Your registration record is public and it shows all of this. Neb. Rev. Stat. 48-2117 requires the database to record whether each contractor carries workers’ compensation insurance, is self-insured, or "is a sole proprietor with no employees and does not carry workers’ compensation insurance," and provides that this last entry "creates a presumption of no coverage." A general contractor deciding whether to hire you can see your coverage status before they call.

Official sources: Nebraska Department of Labor: Contractor Registration - Who Needs to Register; Neb. Rev. Stat. 48-2110 (Contractor Registration Act: workers compensation; notice of revocation); Neb. Rev. Stat. 48-106 (Nebraska Workers Compensation Act: employers covered); Neb. Rev. Stat. 48-2117 (Contractor Registration Act: database of contractors)

What Nebraska licenses by trade, and what we could not confirm

Electrical work is the clear case. Neb. Rev. Stat. 81-2108 makes it unlawful to wire for or install electrical wiring, apparatus or equipment for another without a Class B electrical contractor, electrical contractor, Class A master electrician or fire alarm installer licence, and makes it unlawful to do the work or supervise an apprentice without being licensed as a journeyman or fire alarm installer and employed by one of those licence holders. Neb. Rev. Stat. 81-2118 provides that "All licenses or registrations issued under the State Electrical Act shall expire on December 31 of each even-numbered year," so the electrical calendar does not line up with your annual contractor registration.

Plumbing and HVAC are where we have to be careful, and we would rather say so than invent an answer. Nebraska runs a single official directory of state licences, the One-Stop License Portal, and its own category list reads "Advertising Agriculture Ambulance/EMS Amusement Park Asbestos Banking/Finance Body Art Boilers Business Childcare Construction Contractor Conveyance Cosmetology ... Electricity Environment & Energy Explosives/Fireworks Facility Fire Alarm ..." with no plumbing category and no HVAC category anywhere in it. We found no statewide plumbing or HVAC contractor licence, and we found no state page asserting one exists.

What we are NOT saying is that plumbing or HVAC work in Nebraska is unregulated. Municipal and county licensing, permitting and inspection is a separate layer that the state portal does not index, we publish no municipal requirement anywhere on this site, and the absence of a state category tells you where to ask rather than that there is nothing to ask about. Before you quote plumbing or mechanical work in a Nebraska city, ask that city’s building department what it licenses and what it permits, and get the answer in writing.

Official sources: Neb. Rev. Stat. 81-2108 (State Electrical Act: licence required; exceptions); Neb. Rev. Stat. 81-2118 (State Electrical Act: licences; expiration; renewal); Nebraska State Electrical Division; Nebraska One-Stop License Portal

The Nebraska calendar a new contracting company actually runs on

Contractor registration is annual. Neb. Rev. Stat. 48-2105 provides that "Each application shall be renewed annually upon payment of the fee prescribed in section 48-2107," and the Department of Revenue restates it as registration that "is required to be renewed every 12 months." The Department of Labor renewal runs through the same conreg profile you created to register.

Entity reporting is biennial and the year depends on what you formed. The Secretary of State states LLC biennial reports "are due in the odd numbered years by April 1, delinquent June 16" and corporation biennial occupation tax reports "are due in the even numbered years by March 1, delinquent April 15." Electrical licences run on a third calendar again: Neb. Rev. Stat. 81-2118 provides that "All licenses or registrations issued under the State Electrical Act shall expire on December 31 of each even-numbered year."

Three separate cycles, three separate agencies, and none of them will remind the other. That is before employer filings, which begin the moment you hire: unemployment insurance tax through the Department of Labor and income tax withholding through the Department of Revenue, both of which the Department of Revenue lists as obligations separate from and additional to contractor database registration.

Official sources: Neb. Rev. Stat. 48-2105 (Contractor Registration Act: application; contents; renewal); Nebraska Department of Revenue: Important Information for Contractors Performing Construction Services in Nebraska; Nebraska Secretary of State: Annual/Biennial Reporting; Neb. Rev. Stat. 81-2118 (State Electrical Act: licences; expiration; renewal); Nebraska Department of Labor: Unemployment Insurance Tax

Check the official page yourself before you file or sign

Nebraska splits contractor rules across four places that do not cross-reference each other cleanly: the Contractor Registration Act in Chapter 48 of the statutes, the Department of Labor pages that administer it, the Department of Revenue guides that attach a sales tax election to the same registration, and the Secretary of State for the entity. This batch found the two departments publishing different registration fees on the same day, which is a fair warning about treating any single page as final.

Two limits on what you just read. We publish no municipal fee, bond, insurance minimum or renewal cycle for any Nebraska city or county, because no local jurisdiction has cleared our publication review; where a local rule matters we tell you to ask the jurisdiction. And we could not reach wcc.ne.gov, the Workers’ Compensation Court site, on the day this was written, so every workers’ compensation statement here comes from the statute and from the Department of Labor rather than from the court’s own guidance.

Official sources: Nebraska Department of Labor: Contractor Registration - Who Needs to Register; Nebraska Department of Revenue: Nebraska Construction Contractors FAQs; Neb. Rev. Stat. 48-2107 (Contractor Registration Act: fees)