I would suggest to you that you and your wife settle down and slow down just a little bit and catch your breath and try to find a good EA enrolled agent that is licensed to practice before the IRS and have some face to face meetings with the EA and try and get the self employed business operation set up correctly for this purpose and your situation at this time in your life since you are now dissolving your S Corp.

And your wife was helping and getting paid for doing so with admin duties at that time in her and your life for this purpose.

Hope that you find the above enclosed information useful. 11/29/2011

Dissolving the S corporation could have tax issues if you had assets.

As for wife as employee or partner, you have to make the decision. Even as partners, you can elect to be a qualified joint venture (2 schedule C forms instead of a 1065).

a dba is a local designation that you advertise in the local newspapers when you apply for your local business license, it is not a tax designation

if you dissolve your S corp, yes, you very likely will report as a sole proprietor, and if your wife participates in this business you can file this on two Sch c's, one for yourself and one for the wife, dividing everything equally

as such you would not pay her for her participation, her income would be the 'net' amount she reports on her Sch C