It is reported as an other non-wage expense in both cost of sales and regular expenses.  This is important as without wages there is (a) an appearance flag, (b) effect on QBI, (c) if the stockholder is also part of the PEO a real issue (I have one) of reasonable compensation as well as the IRS has problems with this as the person who controls the business cannot be a leased person, (d) issue with S corp health insurance for the stockholder if no wages present, (e) issues with retirement plans [if the PEO doesn't have one] because no wages are reported.