Yes the $3,000 is deductible business expense. If you are a Sole Proprietorship, as you meet the $400 net income filing threshold, you will need to file a separate Schedule C (or Schedule C-EZ) for the business and claim the income and expense on that. See Income Taxation of Sole ProprietorshipIf you have a LLC, S Corporation, or C Corp, claim the business expense and income accordingly.And yeah you need to issue Form 1099-MISC to the independent contractor you hired. Regarding what 1099-MISC is, how and when to file it, IRS instructions, etc., check here: Form 1099 MISC Rules & Regulations