Advice on first consulting engagement

I have been a Sybase/Microsoft DBA for 2 years and have just been offered an opportunity to consult on a new project modeling a database for a small e-commerce company.
I have never free lanced before, so I am filled with questions about best practices and CYA stuff. Should I incorporate? What is the best way to bill the company, should I create an invoice and issue it to the company for my hours? What type of contract, if any do I need? Can I be sued if they have any later problems?…Youget the picture. Any advice would be appreciated.
George
feel free to email me on this
gmsayloriii@email.msn.com