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You will use schedule C and it is better if you open a bank account for your business, keep your business income separate from your regular income
See schedule C-----> http://www.irs.gov/pub/irs-pdf/f1040sc.pdf
Make sure you keep the invoices so you can show the IRS in case you get an audit letter
If you are going to use your car for your side business make sure you keep a mileage log
If I am audited will my business bank account be enough?
Your business bank account will be good but remember most of the time they want to see invoices and receipts specially if you have expenses
So an invoice a generated on my computer for my client is enough proof. Couldn't anyone produce an invoice?
If you can you can purchase an accounting software like Quickbooks to keep your business records in order
If you have an invoice and then you deposit the money into your business bank account the IRS will see that the money went to your bank account and they will also be able to verify the customer name and address
Ok so they will not need to bother my clients by contacting them to prove any business transactions, correct?
They IRS won't bother the IRS unless they find something ilegal and/or irregular
ok. Thank you.