The price you quoted is within reason. You can get idea of prices by finding websites that provides similar services and display their prices on their website.
here is an example. Certainly there are website that costs thousands of dollars -- especially if they are eCommerce, luxury style, Flash, or content manage sites that employs technologies like
Joomla.
In the United States, a person can do freelancing without registering as a company. In that case, you are by default operating a business as a "sole proprietor" and business tax, profit, and losses are "passed through" onto your personal tax return. The disadvantage of this is that you are exposed to certain personal liabilities. But many people start out this way.
But in order to separate your business finances and liabilities from your own personal finances and liabilities, then you need to form a company. A popular choice in the United States is to form an LLC (Limited Liability Company). This can be done on your own and even online without the need of a lawyer. In many states (if not all), it is certainly possible for you to be an "single member LLC". That means that the company has only one person and that is you. Here are more
information on freelancing business.
I don't know how it is with Canada.