Very broadly speaking:
You owe income tax and self-employment tax on your net income, which is gross income minus legitimate expenses.
You are required to keep accurate business records of your income and expenses, regardless of whether or not you get tax reporting forms for your income.
You don't get a business deduction or personal tax deduction for "donations" of your time. You can only deduct donations of money you actually pay to someone, and only if that money came from your taxable income in some way. However, items donated to you in reward for your business activities are included in your taxable income according to their fair market value (what they are worth or what you could sell them for).
@VolvoGirl used to have a collection of helpful links for new small business owners. Are you still around?
