either way will work. if you are going to use them alive, there are a number of ways to hook them, depending on where you are fishing them and how you are going to fish them. if you are using a cat bobber (float) in relatively calm water, i would hook them in the back right behind the dorsal fin. if you are fishing them on a bottom rig (carolina rig) in calm water, hook them on the bottom just behind the anal fin ar right in front of the tail. if you are fishing in current and are using a bottom rig, i like to hook mine through the mouth. run the hook in thier hook and out through the top lip just behind the nostrils. this will keep them from drowning in the current. if you are going to use them dead i would cut them up and use cut bait. when i use cut bait i like to take all of the scales off of them first. i will make my first cut right behind the gill plates and leave the guts hanging out. i will hook the head through the mouth and use it. the belly section i will usually cut into strips, kind of filleting them as i go. that way there are no bones in there. they seem to hold on longer this way. the tail section i just throw into the water for chum. you can definately catch channels with live or cut bait. the ones you do catch tend to be bigger but the action is a little slower for me than if i am using chicken liver. these are also great baits for flateheads. you can use smaller gills (2 to 4 inches long) alive, or if you are going to use them dead then just step on them and crush them and hook them through the same way you would hook a live one. diffrent people use diffrent methods and i am not saying mine are the best, but they work for me. i am sure others will voice thier opinions on here. good luck and i hope this was helpful.