Well, I can’t really answer a question as general as that – what you need depends on your circumstances, and my answers here are not legal advice – they are for educational purposes only. :)
But there’s actually a ton of info on these general topics on my blog, at robhyndman.com. The archive system there is busted right now (being fixed soon) so you may have to dig a bit, but there are answers there. It explains, for example, why you might want to think about incorporating (there are non-legal reasons to do it too), and how you do it.
Generally, web designers should be thinking about having a proper form of customer agreement that protects each parties. Ideally, one that will not need to be lawyered every time you send it to a new customer ;)
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