Where Should You Form Your LLC? The Truth About Wyoming, Delaware, and Your Home State

I’ll be straight with you: I almost made a costly mistake.

I was watching this YouTube video by Clint Coons titled “Where to Form Your LLC: Wyoming vs. Delaware vs. Your Home State,” and the brother had me convinced. Wyoming sounded like the promised land for LLC formation. No state income tax, strong asset protection, low fees, enhanced privacy. Sign me up, right?

But something didn’t sit right with me. See, I’m a futures trader based in New York City, and I know from experience that when something sounds too good to be true in finance, you better dig deeper before you commit. So I did my homework, and what I found was eye-opening. The reality is far more nuanced than what you’ll hear in a fifteen-minute YouTube video.

Let me break down what I learned, because if you’re thinking about forming an LLC, you need to understand this before you write any checks.

The Wyoming Sales Pitch

Coons makes Wyoming sound like LLC heaven, and on paper, it is impressive:

• No state income tax (Wyoming doesn’t have corporate or personal income tax)
• Low annual fees (about $60 for the annual report)
• Strong asset protection laws with robust charging order protection
• Enhanced privacy (member and manager names aren’t required in public filings)
• Fast processing times (1-2 business days)

He also mentions that Delaware is the go-to if you’re planning to raise serious capital and eventually go public, which is true for corporations but less relevant for most LLC operators.

The pitch sounds solid. But here’s the thing that gets glossed over in these videos: where you should form your LLC depends entirely on where you live and how you operate your business.

The Reality for an NYC-Based Business Owner

I live and work in New York City. I trade futures contracts from my home office. This is my primary business activity, and it all happens right here in the five boroughs. Given that reality, let me show you what forming a Wyoming LLC would actually mean for me:

The Tax Situation (The Real Deal-Breaker)

Here’s what nobody tells you in those YouTube videos: you pay state and local income taxes where you live and conduct business, not where your LLC is registered.

As an NYC resident running my trading operation from my apartment, I’m on the hook for:

• Federal income tax (that’s everywhere)
• New York State income tax (up to 8.82% on pass-through income)
• New York City personal income tax (approximately 3.078% to 3.876%)
• NYC Unincorporated Business Tax, or UBT (a significant 4% tax on net income if my trading qualifies as a “trade or business,” which it likely does)

That Wyoming “no state income tax” benefit? It vanishes the moment you’re a New York resident conducting business in New York. I’d still owe New York every dime I currently owe, Wyoming LLC or not. The income is sourced to where I live and manage the business.

The Compliance Headache

But wait, it gets better. If I form in Wyoming while living and operating in NYC, I don’t just get to register in Wyoming and call it a day. New York State requires that any LLC “doing business” in New York must register as a Foreign LLC. Trading from my home office in New York? That’s doing business in New York.

Let me show you what that means in practice:

You see what happened there? I’d be paying fees in two states, maintaining compliance in two states, and still getting hit with that brutal New York publication requirement that can run over a grand in New York City counties.

The publication requirement deserves its own callout. In New York, you must publish a notice of your LLC formation in two newspapers for six consecutive weeks. This isn’t a small cost—in Manhattan, Queens, Brooklyn, or the Bronx, you’re looking at $1,000 to $1,500 or more. And if you form in Wyoming but register as a Foreign LLC in New York? You still have to publish. There’s no escape.

When Wyoming Actually Makes Sense

Now, I’m not saying Wyoming is a scam or that Clint Coons is wrong about everything. Wyoming legitimately is one of the best states for LLC formation—if your situation calls for it.

Wyoming makes sense when:

• You don’t have a physical presence in any state (fully online business with no clear nexus)
• You’re forming a holding company for assets and not actively conducting business
• You’re a non-resident of high-tax states and your business operations don’t create nexus elsewhere
• You genuinely don’t have substantial business activity in states with income tax
• Asset protection and privacy are paramount and you’ve structured things to avoid foreign LLC registration elsewhere

For example, if you’re an international entrepreneur with no U.S. residency or physical presence, running a digital business? Wyoming could be perfect. If you’re creating a holding company for intellectual property or investments without active operations? Wyoming’s asset protection and lack of income tax could save you real money.

But if you’re living in New York, California, Massachusetts, or any other state with income tax, and you’re actively running your business from there? You’re likely creating more problems than you’re solving.

The Delaware Question

Coons mentions Delaware as the choice for businesses planning to raise capital. He’s right, but with context. Delaware is the gold standard for corporations planning to go public or raise venture capital. The Delaware Court of Chancery has centuries of business case law, and investors and VCs are comfortable with Delaware corporate structures.

For LLCs, though? Delaware’s advantages are less pronounced. You get:

• Established business law and court system
• Flexibility in operating agreements
• No annual franchise tax for LLCs (though corporations pay hefty franchise taxes)

But you don’t get the tax benefits (you’ll still pay income tax where you operate), and you’ll face similar foreign LLC registration requirements if you’re doing business in another state.

Delaware makes sense primarily if you’re planning a complex business structure, expect to raise institutional capital, or anticipate converting to a C-Corp down the line. For a single-member LLC running a trading operation or service business? It’s usually overkill.

What I Decided (And What You Should Consider)

After running the numbers and examining the compliance requirements, the answer for me was clear: form the LLC in New York.

Yes, New York has higher initial fees. Yes, the publication requirement is expensive and annoying. Yes, I’ll pay New York State and NYC income taxes on my trading profits.

But here’s the thing: I’m going to pay those New York taxes regardless. The publication requirement applies whether I form domestically or register as a Foreign LLC. The only difference is that by forming in New York, I:

• Avoid duplicate annual fees
• Simplify my compliance (one state instead of two)
• Eliminate the Foreign LLC registration process
• Keep everything straightforward for my accountant
• Avoid potential issues if New York decides to audit and question why I have a Wyoming LLC when all my business is in New York

Sometimes the boring, straightforward answer is the right answer.

The Bottom Line: Do Your Homework

The YouTube gurus pushing Wyoming aren’t necessarily wrong. They’re just not talking to you specifically. They’re talking to a general audience, and some portion of that audience will benefit from Wyoming formation.

Your job is to figure out if you’re in that portion.

Before you form an LLC anywhere, ask yourself:

1. Where do I live?
2. Where do I conduct business?
3. Where are my customers/clients located?
4. What type of business am I running?
5. Will I have employees, and where will they be located?
6. Am I trying to avoid income taxes, or am I trying to optimize my business structure?

Then talk to a qualified attorney and CPA who understand your specific situation. I’m talking about professionals licensed in your state who deal with business formation regularly, not just generic online advice.

The worst thing you can do is form your LLC based on a YouTube video or blog post (including this one) without considering your specific circumstances.

For further research, here are some legitimate resources:

• Wyoming Secretary of State Business Division
• New York Department of State Division of Corporations
• IRS LLC Information

The right structure for your business is the one that makes sense for your situation—not the one that sounds best in a marketing video. Wyoming might be that answer. Your home state might be that answer. Delaware might be that answer.

But you won’t know until you do the work.

Stay sharp out there.