Temporary Worker - what do I need to register as to work as a freelance designer?

Dear Experts,

I recently quit my full time job to work as a fixed term freelance designer - I am paid through a recruitment agency as a temporary worker. I work 3 days a week - the rec agency pay my tax/ national insurance.

On the other 2 days I intend to work as a freelance designer (already have a client which I just started doing some work for last week..).

My question is whether I need to set myself up as a limited company or register as a sole trader - how quickly I have to do this in terms of keeping the tax man happy, plus how much I need to keep aside to pay my tax etc?

Help! Very confused, I have read quite a few forums but none seem to cover my situation!

Many thanks in advance! :eek2