I report every red penny I earn from anyone and give it to my accountant! USA here

I work on a cash accounting basis. I report all the income, and use the amounts paid to me in the calendar year shown in my Paypal account for the income numbers. This, along with everything else, goes to the accountant.

Yep, that's what I do.  I run my reports of out Quicken, and each Paypal deposit is withdrawn separately, so I can label them in Quicken as being from so-and-so.

I'm in the US and I report everything I earn as a sole proprietorship. I have a spreadsheet in which I track monthly income by agency so that I can report what doesn't generate a 1099. PayPal is close, but there are occasional checks (I licensed some photos to a book publisher and they don't do PayPal, for example).

As I don't hire models or staff and use my office (at my home) for both business and personal use, I forego any deductions for expenses. It might cost me a small amount, but in the big scheme of things (I file jointly with someone earning a lot more in a full time job than I do with part time stock) it avoids complex calculations for very little benefit.

I forward the income information to our tax accountant who puts everything in the right places on the right forms

I use Quickbooks because my accountant can take the accounting file and drop it into his tax system. There is an online version for a reasonable price - but I started with the locally loaded version and have stayed. Income and expenses are all there. Mileage has been a big cost for me, followed by equipment. The occasional distant trip adds expenses up fast with hotel, food, and activities as quick adders.

If you are just starting the accounting thing then a spreadsheet is cheap. Reporting as hobby income is a place to start but you cannot take expenses below a net of income of zero (which you really don't want to do as a photography business either). For the next step up search for accounting packages on the Internet for use by freelancers. I've not tried any so don't have a recommendation but I've seen them for free and/or very cheap. Quickbooks also has (had?) a free version which has a lot of limitations but might work for a very small operation to start. Of course then they want you to move up but you would also have a experienced start on the regular use.

I can see that you use an excel to track all your incomes and I understand that you use it to report them in your tax return. Can you ask for to the agency some kind of document to prove those incomes? Some feedback?

I keep a separate business bank account and PayPal account solely for MicroStock, and all payments go through those;  for major purchases, I keep receipts so I can offset against income.  I don't really bother for small expenses.

I am registered with HMRC (the UK equivalent of the IRS) as self employed (sole trader) and just do a self assessment form.  My gross earnings aren't large so I am not required to do detailed returns, and I am retired so my tax affairs are relatively simple.

I keep a ledger book with all my income and expenses, also keep receipts and separate PayPal and business checking and credit card accounts. We use Turbo Tax Small Business and it is pretty easy - they have a program that walks you through filing a Schedule C (self-employed in the US). Some agencies and clients send me a 1099 but many don't so I keep track of every penny. I also sometimes sell prints which require me to file a state sales tax report once a year, which I can do online with New York State. Even before I started with stock I was self-employed so I needed to keep track of income and expenses carefully. The nice thing about Turbo Tax is it carries over depreciation expenses from year to year for you on large equipment purchases and does all the calculations. I believe you can import from Quicken to Turbo Tax as well.