So we're working on creating Android Material Awesome, a library which will hopefully incorperate the benefits of Material Design, Twitter's Bootstrap, and FontAwesome. What we really wanted is a project other people can easily include into their projects using gradle dependencies. To do this we needed to create a standalone library project so we could make it as lightweight as possible for including as a dependency, and a sample app that would use it for testing. These are the steps we took to get started in Android Studio (version 1.1).
The first thing we needed to do was to create two new projects, with all the default settings (Blank Activity etc). One for our sample app, and one for our library. We added both of ours into the same GitHub repo, however you can save them wherever you like.