If they each have a separate business, they must each file a separate schedule C to report income and expenses for their own business. This is separate from the husband's decision to form a single member LLC, that is a legal decision, not a tax decision. Whether he is a sole prop or a SMLLC, he will file a separate schedule C for his separate business.
There are options to form one business that we could discuss, but you indicate they prefer to keep things separate, so I won't go into those other options unless you ask.
