You need to file form 1065

You still need to file the form, deadline is 4/15, but you can file extension with form 7004.

I suggest you have both of you as partners, so that you don't have to file schedule C (that's what IRS meant by "single member LLC disregarded) and reduce the chance of getting audited compared to sched. C.

Your LD is partner, not employee, no need to issue W2, but you do need to issue K-1 form for each partner.

not sure about using home as office for deduction, but with $400, not worth it.

You may have to pay State franchise tax if you are in CA, the first year is 15% of profit, 2nd years and after is $800 minimum.

I'm not accountant, consult with a CPA.