double taxation
Double taxation is a concept that applies to situations where the owners of a company must pay taxes at two levels: the level of the company itself, generally because the government views the company as a separate legal entity, and at the personal level. For example, C-Corporations are double-taxed legal entities. C-Corporations must pay taxes to the government on any taxable income they generate. However, the owners of C-Corporations must also pay personal taxes on income that they receive from the C-Corporation.
C-Corporations have a number of benefits that often outweigh these considerations including: the ability to carryforward or carrybackward tax losses, the ability to easily incent employees, limited liability protection, the ability to raise money from equity investors more easily, and governance structures that allow the company to grow to a relatively large size.
pass-through taxation
LLCs, S-Corporations, Limited Partnerships, etc., are all considered pass-through legal structures. This means that these companies are not viewed as a separate taxable entity apart from the owners. The owners must pay taxes on income received from the company but the company itself does not need to pay taxes. There are some small exceptions to this because in some states even these entitites must pay some "corporate" tax but it is generally a relatively small and often fixed amount (meaning that it does not vary with the amount of income the company is producing).