Unless you are using accrual accounting and are required to report inventory, you can enter the cost of materials used to create your products and amounts paid for labor as an expense. See this article for more information from TurboTax regarding when the requirement to track and report inventory applies.
In TurboTax, you can report costs incurred for materials used in creating your products in the inventory section as Cost of Goods Sold or in the expenses section as Supplies, or whatever expense category makes the most sense.
You can report amounts paid for services under contract labor. Be aware of the requirement to issue a Form 1099 if you paid someone who is not your employee, such as a subcontractor, $600 or more for services provided during the year by January 31 of the year following payment. See here for more information from the IRS on this topic.
See this article for more information on reporting small businesses in TurboTax.
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