If you file a joint return, you are required to report all your income. The IRS might never find out about a business that small, so it's up to you. but legally you report.
You report your gross income and expenses on schedule C, and pay income tax and self-employment tax on the net profit. That may have very little to do with the amount of sales tax you collected. And, whether or not you report the sales tax to your state depends on state law and is beyond the scope of this income tax forum.