I believe you are on the right track. The salary that you received should be reported as your income. However, they should have also been reported as business expenses which would have reduced the business profit that was reported. I recommend that you speak with a tax pro as soon as possible because it sounds like you will need to amend your tax return.
If you don’t have a tax professional, check out this article which gives you some resources to locate a tax pro:https://fitsmallbusiness.com/how-to-find-a-quickbooks-proadvisor/