It looks like they have decided to remain partners through the end of this year (2021).

So at the end of this year they need to file a final return for tax year 2021.

Do they have to file any papers with the state (Oklahoma) or the IRS to notify them that the company is switching to a Schedule C?

(Also, just curious: Is there a way, or any advantage, to filing a business return for tax year 2022, with only one owner, who receives the only K1 from the company?)