Assuming that you're located in the UK, there's no need to incorporate as an LTD, but it does have many, many advantages.
If you're not looking to incorporate, you'll still need to look up what you need to comply with legally (such as ICO registration, self-assessment with the HMRC, etc).
Not at all, you can easily trade as a sole trader or partnership. LTD companies have their advantages and drawbacks.
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