Probably not necessary to change the 1099 documents as a sole proprietorship is taxed the same way as a single-member limited liability company. This means that whether you are a sole proprietor or a SMLLC, you will be completing a Schedule C, Profit or Loss From Business. You may have heard the term "disregarded entity" when referring to SMLLC and taxes. That is because the IRS considers a SMLLC a "disregarded entity", meaning there is no separation between the business and its owner for tax purposes (and tax purposes only; legal issues are a different matter). By default, the IRS taxes a SMLLC the same as a sole proprietorship.
However, as a SMLLC, you do have the option to be taxed differently, and perhaps this is something you might consider going forward. For example, while the business income tax obligations of a SMLLC are the same as a sole proprietor, the SMLLC may choose to be taxed as a C Corporation or S-Corporation. This is something you can’t do if you elect to do business as a sole proprietorship.
There are many things to consider before electing to be taxed as a C-Corporation or an S-Corporation and therefore, you should discuss this issue with your personal tax advisor.
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