The best answer is to consult a competant CPA in your area for a plan on how to handle local, state and federal taxes.
Many full time professionals set up a corporation and draw a salary or disbursements.
Others file as self employed internet marketers and claim income as sales commissions.
The one thing we at CAP do recommend is PAY YOUR TAXES!!! failure to do so in the US is a felony punishable by very stiff fines and a possible prison term. My guess is the same holds true for most other countries as well. Its not worth the risk to not file or to vastly under report your income.