My business income and expenses all go on Schedule C of my 1040. I don't know how someone could possibly complete Schedule C with only total gross income and expenses. I know not everyone uses Schedule C, but I would imagine that a sole proprietor such as Yardguy would. My business is actually set up as an LLC with myself and wife as partnerrs but for tax purposes a sole proprietorship. I keep all of my receipts filed alphabetically by vendor name; I have a seperate manilla folder for each vendor for each year and have them filed chronologically by date within each folder.
Here's Schedule C: http://www.irs.gov/pub/irs-pdf/f1040sc.pdf