Subletting an apartment that I do not own and still living there.

[Joel Bechlem]

Thank you in advance everyone. I genuinely appreciate your time here. 

Here's the situation: I am interested in subletting two out of three rooms in my apartment while continuing to live there. I live in Indiana. My landlord is okay with this. I would like to sublet at a profit (meaning I will add amenities to my apartment out of my own pocket, and then charge more than my landlord is).

I have a couple specific questions:

-Do I need insurance? If so, what kind and why? 
-I know I will have to file a schedule e at tax time, but what percent of rental income should I plan to set aside to cover taxes? 30%?
-How do deductions work on a schedule e? 
-Do I need a lease agreement? (My landlord does not have a lease agreement) If so, can I make my own or do I need to hire a lawyer?

Aside from these questions, if there is anything I am missing or any other tips you could give on subletting rooms in a place you are living that you do not own I would be exceedingly appreciative of your time! 

Thank you!