What are the differences between S corp dividends and salary in terms of tax implications and financial benefits for business owners?

S corp dividends are taxed at a lower rate than salaries, which can result in tax savings for business owners. However, salaries are considered a business expense and can be deducted from the company's taxable income, reducing overall tax liability. Additionally, receiving a salary can help business owners build a consistent income stream and contribute to Social Security and Medicare benefits.