The best way:
Analogue recording, then transfer that to digital computer, keeping both the analogue source for analogue distribution (vinyl, casette tape), and the lossless (WAV, AIFF, FLAC..... NOT MP3!!) digital transfer for digital distribution (CD, digital tape etc.).
The less good way:
Record straight to computer in whatever way you seem fit (it's your choice how you want quality), save recording to WAV, AIFF or FLAC but never MP3 or OGG etc. (like I said above). You can't however distibute on analogue media this way, though.
Both ways:
Internet distubution shall be done in FLAC, or a MP3 alternative for 56k users (or they can choose to wait some days for getting the FLAC version since it is better)
Note: If you are stupid enough to record to MP3 or OGG anyway, or encode to MP3 somewhere halfway, you don't need to distribute in FLAC though.
Note 2: If you mix with a lossy file (e.g. add after-recording-effects and such to a MP3 or OGG) you will keep encoding and decoding the file on every change and the quality will get poorer and poorer. => Use WAV, AIFF or FLAC until the very last stage if you now really need to distribute in MP3 or OGG