"I was not going to file payroll for the previous year. I was going to give her a K1 with the net profit in box 1."

You cannot do this for S Corp, though. That is violating the requirement for Reasonable Wages. Yes, of course a shareholder gets a K-1. No, you cannot give only a K-1. S Corp shareholder that works for the business is Employee-Shareholder.

Payroll is required.