LLC Reform: Save New York businesses $2000

Every state has established law. Delaware has what are called "chancery courts" which are dedicated entirely to business issues. The laws and courts are great for specific types of businesses, i.e., those with outside investors or that are primarily B2B.

For small businesses, Delaware is not only an overkill, it's the wrong choice. A large business can deal with legal nexus in multiple states (Delaware, and where they actually operate) but the cost of handling multi-jurisdiction legal expenses will quickly kill most businesses. Moreover, while Delaware's chancery courts are great at robotically following the established law, they are absolutely horrible for matters involving discretion or equity (legal equity, a concept essentially meaning "what is right"), which is quite ironic, since "chancery courts" were originally courts of equity, not law.

Incorporating in Delaware also does nothing to avoid local legal requirements--you still have to register, as a foreign business, which in many states means you lose out on the tax breaks or other programs that are only available to local companies. (California has a few.) You also remain subject to the laws of the state in which you actually do business--and legal disputes can still be subject to the laws and courts of the state in which you actually do business. (Forum clauses aren't ironclad!)

Are you sure? The linked page is thin on information but it does list this as one of the cons:

Companies may start LLCs elsewhere, reducing revenue for New York state.