I am a single-man business. Would your situation be better if it had just been you? In other words, was it the fact that you had that other employee that is going to cause you to shut down? Or would it have happened with just you?
So, two scenarios: a) If you were a sole-proprietorship, you made $100K revenue, paid $10k in AWS fees, you would pay personal taxes on $98k (100 - 10/5) that year. b) If you paid a contractor $50k that year, you would pay taxes on $88k. (100 - 10/5 - 50/5).
In the past taxes base would be a) $90k (100 - 10) and b) $40k (100 - 10 - 50). So yeah larger tax implications for having employees, but the same would be the case with any expense.
It looks like I may have to shut down my business before I even get started.
Good luck with your situation!