for best practice's sake, in .js external files containing functions
function handleClick()
{
$(element).click(function(e){});
}
// then call them on DOM ready with $(function(){}), this is an alternative provided by jquery equivalent to $(document).ready()
$(function(){ handleClick(); });
I do this to have a nice orderly list of functions that is easier to manage. One file, each with a couple of functions to handle the events.
So why not inline? Harder to manage, obstrusive and easier to hack (by easier to hack I mean not that much of a hassle or inconvenience to hack as I can readily modify the DOM with Firebug) compared to a compressed external JS file.