Shareholders of S-Corps must earn a reasonable salary for the work they perform, but may receive distributions from profits also. These distributions are not subject to Social Security and Medicare (7.65% from the employee and 7.65% from the Corp = 15.3%).

Therefore instead of all their income being from salary (i.e. payroll), in addition an S Corp shareholder distribution is taken. Say the distribution was $50,000, that would save $7,650 ($50,000 x 15.3%) in Social Security and Medicare taxes.

There are other benefits as well.