You have just accepted a position as the Payroll Manager for an individual who owns several separate businesses. The owner comes to you on your first day with the following questions.

My Company S has frequently laid off workers due to fluctuations in the business. Therefore that company has a high SUTA rate. I'm thinking about starting a new company, closing Company S, and then transferring the workers over to the new company. That way I can take advantage of the lower new employer tax rate. What do you think about that plan?