Let's say your corporation is about to accept $500,000 in income. The combined Federal and state tax rate at the corporate level might be 40%. That leaves $300,000 left in the corporation. Now, let's assume you want some, or all, of that $500,000 before the tax man gets it.
Let's say you pay your self the $500,000 in bonus. The corporation pays $0 tax, and you pay some 33%, or $165,000. You clear $335,000 after taxes.
How about a buyback? The corporation has $300,000 to buy shares. Let's say they buy 10% of the company shares for $300,000. The remaining owners see their ownership percentages increase by 11% (1/.9), but you get no cash.
As a dividend, let's say the corporation pays out all of the after tax income, $300,000, as dividends. You receive and pay 33%, or $99,000, in taxes. You get to keep $201,000.
Thanks again from Just Answer. I'm PDtax.