You need to find a competent person to help you set up the S Corp properly. The books on the sole proprietor will be closed out so that all that will remain will be a balance sheet for the Sole prop. If you stop operating as a sole prop. on a date other than December 31, I think you'll file a schedule C for the Sole Prop. for the portion of the year it was operated, and file an 1120S for the portion of the year you operated as an S Corp.
Whether liabilities transfer to the S Corp., I would think they would not. I would think you would simply exchange the lower of adjusted basis or fair market value of your assets, including the checking account, for Corp. stock. Someone more knowledgeable may be able to help you on this forum, but I would strongly advise that you consult with a competent person to get the S Corp. set up right. I believe you will have to file articles of incorporation with your state, and there will probably be other record keeping requirements to be met on a periodic basis. You'll also have to file for a new employer identification number (EIN). And paying yourself a reasonable salary is a biggy with an S Corp from the IRS point of view. See link below for what is involved with assets being donated or transferred to the S Corp. http://taxes.about.com/od/taxplanning/a ... assets.htm
In regards to claiming mileage, travel, meals, and entertainment, one way to do it is to fill out an expense report with appropriate information to be submitted to the corp. for reimbursement. Provided you set up an accountable reimbursement plan, and meet its requirements, none of the reimbursement is income to you and the expenses are fully deductible by the corp. Whether there's an easier way to do it, I don't know.
I wish you the best of luck with the new business entity.