Just click "create empire". It doesn't matter if there is already one on the planet, another will be created.
You have to be in SM mode to switch freely, but this can be done on the left hand side of the system map, there will be 2 drop down boxes. The top is the system (will only give you the options that the currently selected race are aware of) and the bottom is a selector for all the races in the system. Additionally, you do not have to select a race there to access it. You can, on the individual screens, select which empire you want. That speeds up issuing research, production, etc. to multiple empires. This doesn't work with the diplomacy screen (you need to system-map-select the race before entering the diplo screen) and I've had a couple of bugs regarding the class design screen and another one using that, but nothing major. Otherwise, I'm pretty sure you're given the option to switch even if you aren't in SM mode, but it requires you to enter the race password. By default that's nothing, so you just have to press ok, but it's another step. And if you plan on actively playing both races... I'm not sure about this, but I'm assuming you won't get interrupts for the currently unselected race without SM mode on, so it might pay to leave it on anyway.
