What is the difference between an S corporation and a C corporation?

The designation of a corporation as an S corporation or a C corporation is relevant primarily for tax purposes, with S corporations taxed pursuant to subchapter S of the IRS Code, and C corporations taxed pursuant to subchapter C of the IRS Code. C corporations have to pay federal and state income taxes on all income earned by the corporation and the shareholders have to pay federal and state income taxes on all dividends paid to the shareholders by the corporation, so every dollar earned by the corporation and made available to its shareholders is essentially taxed twice (once at the corporate level and once at the shareholder level). S corporations are flow-through tax entities in which the income or loss of the corporation flows directly through to the shareholders and is only taxed once at the shareholder level without the corporation paying any corporate level income taxes.