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Business Status: Dissolution vs. Revocation

There are many things to keep track of as a business owner. One of those is your business's current status with the State of Nevada. Keeping an eye on your standing with the state is simple but it's not uncommon for businesses to find themselves in default or revoked status. There are also business owners that find that their business has run its course and decide to dissolve the entity with the state. There is clearly a difference between dissolution and revocation. What are the differences and is it okay to let a business be revoked?

Before we jump into dissolution and revocation, let's discuss the current status of your business entity. You can check your entity's status at the Secretary of State's Business Entity Search.

Active: Your business is in good standing with the state. This is necessary for applying for loans, bank accounts, or doing business with vendors. All fees are paid and current.

Default: Commonly attributed to not paying state fees or submitting your annual list by the due date. Your company loses its corporate protection at this state.

Revoked: Fees have not been paid for over a year. "If the charter of a corporation is revoked and the right to transact business is forfeited...all the property and assets of the defaulting domestic corporation must be held in trust by the directors of the corporation as for insolvent corporations, and the same proceedings may be had with respect thereto as are applicable to insolvent corporations. Any person interested may institute proceedings at any time after a forfeiture has been declared, but, if the Secretary of State reinstates the charter, the proceedings must at once be dismissed and all property restored to the officers of the corporation."[1]

Dissolved: Someone with the proper authority filed paperwork with the Secretary of State to dissolve your company. You company will no longer do business in the state of Nevada.

A common denominator between a dissolved entity and a revoked entity is not being able to do business in Nevada but lawsuits can still be filed against them, regardless of their status. As far as moving assets goes, dissolving an entity would be better than letting it slip into revocation. The dissolved entity has the benefit of moving property and assets which cannot be said for a revoked entity. If your business does get revoked or even falls into default, then there are a couple of things you'll want to consider before trying to reinstate it. If your business is in default or gets revoked, it may face some stiff penalties and fines. Sometimes, these penalties can accumulate to a point where it may be easier to just cut your losses and start a new entity. Is it okay to leave your business revoked? Well, the answer to that is complicated because you certainly can abandon it. The deciding factor should be discussed with a Nevada business attorney. You should always make sure that you are operating with a sound legal foundation.


[1] NV Rev Stat ยง 78.175 (2013)

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