A customer using their SSN with a sole proprietorship and an assumed name wants to change what their assumed name is because they have changed their business. Can we simply change the name of that assumed name entity on our system or do we need to create a new on and tie the new one to the checking account and remove the old assumed name entity?

A sole proprietor can have as many assumed names as they want. The ownership is still the proprietor since their is no separate business entity.

How you approach the account setup is a matter of bank policy. You customer may want a separate account depending on how they account for business expenses for the respective business lines they are in.

The other thing to consider is how you will approach a subpoena if you receive one using the old assumed name. Will you know that it applies to records for this account if you remove it and replace it with another?