There are several ways to handle it. One way is to treat him as an regular W-2 employee as described in the other answer; along with all the required paper work of being an "employer". Your business will have to get an Employer Identification Number (EIN).
A simpler way is for you to issue a 1099-Misc to your spouse and have him do a separate schedule C & schedule SE, as a separate subcontactor. That way all the expenses go on your schedule C.
A third way is to not issue him a 1099-Misc, but for him to still do a separate schedule C (& schedule SE), with you allocating his share of the income and expenses to him. In other words, instead of treating him as an employee or subcontractor, you treat him as a co-owner of the business. This is how most married couples handle it; unless you feel strongly about it being only "your business".
As a couple filing a joint return, you are allowed to submit more than one schedule C. You each check the Qualified Joint Venture (QJV) box.
