As a sole proprietor, receiving a 1099 is no different than receiving a W2 from an employer.  It is a record that you earned taxable income.

Sending a 1099 to a vendor is your proof of expense.  You actually send a copy to the IRS with your 1040, Schedule C and SE forms during tax time.  It is true that you have invoices and other receipts to prove your expenses but you don’t send those, they are your records.

Corporations receive and send 1099’s as well but the other tax forms are different.  As the CEO of your corporation there are various ways you can pay yourself so I am not going to get into that here.

The new rule will indeed uncover thousands of non-tax paying businesses because sooner or later those businesses will have to answer to a 1099.  I doubt this came up because of hot dog vendors, most likely it was due to the hundreds if not more landscaping, construction and other service companies that have popped up over the last few years.  The IRS and other agencies are going to question these people as to where they got the money to purchase their equipment but never paid any taxes.