No ... you should not merge the 2 business ... you should each keep the one you have even if one will be a loss because on the tax return the 2 business incomes are netted against each other automatically. As long as your business has life you will continue to file a Sch C for it. It makes no economic sense for you to combine the efforts and it is not allowed. Forming a partnership requires extra paperwork and costs and will net you nothing in the end. Seek local professional advice before doing anything differently especially since you are in CA.
