How do freelance designers handle government taxation and client invoicing?

I’m a recent college graduate whose having trouble finding his first design job. I am starting to take freelance work as a serious possibility, and I want to do it properly.

In college I studied graphic design / visual communications and would really like a job in print until I can get my web skill set up. Most companies seem to be looking for web designers; perhaps I can find some print work in the freelance sector.