@kristencaudill as a small business owner or a self-employed person ( another entity / person issues a 1099-NEC to you or your entity ), part of expenses is wages ( including FICA contribution --if ) and/or contract work that you pay for -- it is a business expense both for federal and State purp;oses.
Does this answer your query ? Is there more I can do for you ?
@kristencaudill What do you mean your cost? Yes you can deduct any employee pay you give a W2 and 1099NEC for subcontractors and cash you pay to other people on your Schedule C for self employment. You don't give yourself a W2 or 1099NEC and can't deduct your own salary or any personal withdrawals you make from your business. As a sole proprietor, you are not an employee of the business.
You need to file Schedule C in your personal tax return to report your 1099 self employed income. Do you need help reporting it? Do you use a payroll company to process the quarterly payroll reports and issue the W2s?
Employees Gross Wages goes on Schedule C line 26 Wages
The employer portion of taxes goes on line 23 Taxes and Licenses
IRS pub 334 Tax Guide for small businesses. See page 33 for employee expenses
https://www.irs.gov/pub/irs-pdf/p334.pdf