Right. She needs compensation from the company to be able to contribute to the 401(k), either compensation reported on a W-2 (which requires you to withhold and pay the corresponding payroll taxes), or income from self-employment.
Because the company is an LLC, things are a bit more complicated than tagteam described. If you live in a non-community income state you would have to make your wife a partner in the LLC, file a partnership tax return (Form 1065) and issue Schedules K-1, in which case neither of you would report on Schedule C since you would not be able to treat the LLC as a disregarded entity. If you instead live in a community property state, you have do have the option to make her a co-owner of the LLC and treat the LLC as a disregarded entity allowing you to split the reporting onto a separate Schedule C for each of you in proportion to the ownership interest in the company, giving each of you income from self-employment from which to contribute to the 401(k).
