Robert and James have recently posted some good information on going independent.  Scott also has a good series on being independent.  I posted a few times earlier this year about this as well.

So you have a client and a project to work on... where do you go from there? I wanted to offer some insight into one of the most daunting aspects of being independent - HR and Accounting.  If you're going to go independent, here's what you'll have to be able to do for yourself:

• Health insurance
• Liability insurance
• Workman's comp insurance
• Federal taxes (corporate and payroll)
• Social Security (corporate and payroll)
• State taxes
• Retirement
• Invoicing
• Contract negotiation/execution
• Expense reimbursement

and the list goes on... Fortunately, there are companies that will do this all for you, and more, usually referred to as pass-through agencies.  They have the added benefit of being able to get group insurance rates, and 401K plans - something that is not possible when you're completely independent.  The company I use, Independent Professional Services (http://www.iprofessional.com), will provide all of these services for a small, yearly capped percentage (4%). For me, this is money well spent. 

-Brendan