Every business in the United States is taxed under one of two fundamentally different systems, and the choice between them is the single most consequential tax decision a founder ever makes. This UpLaw guide explains the divide between entity-level taxation under Subchapter C and pass-through taxation under Subchapter K and Subchapter S: why double taxation exists, why venture-backed companies embrace it anyway, and why cash-distributing operating businesses run from it. It walks through the check-the-box regulations that let an LLC choose its own tax classification, the basis rules that determine whether a distribution is tax-free or a capital gain, the self-employment tax arbitrage that drives the S corporation salary-versus-distribution split, the Section 199A qualified business income deduction and its specified-service trap, and the Section 1202 qualified small business stock exclusion that can make millions of dollars of founder gain disappear. It then covers equity compensation — incentive and nonqualified options, restricted stock, profits interests, the 83(b) election, and Section 409A — before turning to state and local tax after South Dakota v. Wayfair and to the asset-sale-versus-stock-sale fight at the heart of every M&A negotiation. A running hypothetical follows two founders from formation through a nine-figure exit, and inline cross-references route to UpLaw's deeper treatments of incorporation, fundraising, equity, and acquisitions.