Making Money with IM

Hey Warriors,

I'm brand new to the whole concept of IM and I don't buy into the quick fix method's for making money, although I know it can be done. Now I'm just asking but when anyone does start making a decent amount of money online do you have to register it as a business for tax purposes? Now I know that a lot of people will tell me that it will have to do with local/national laws etc but lets say that:

Smart Sally makes $10,000 in 1 month and this gets deposited into her paypal account. She has registered her domain as a business and will be liable to pay tax when she then withdraws that $10k into her personal bank account.

Dumb Dan on the other hand also makes $10,000 in one month and gets deposited into his paypal account. He has NOT registered his domain as a business and will not have to pay tax when he withdraws it.

How does Dan explain the huge amounts of money that is being deposited each month? I'm sure I will have to register as a business as the second method would seem illegal, but if I were to say eventually have multiple sites generating a stable revenue would I have to register them each individually or could I put them all under the umbrella of one registered business?

If anyone has any information or have done this before and could help I would be grateful. I'd rather start doing this the right way before jumping in and doing something stupid that could lead me down the wrong path.

Thanks

Declan