You should set up a payroll and register with the inland revenue for PAYE for your empolyee: even if you are paying less than the tax threshold, if they have more than one part time job, they may have to pay tax. Also, if you want to offset the costs of employing someone as a business expense (and that will inlcude employer's national insurance contributions as well) then you will need to put your employee into the tax system, regardless of how much they are earning. Also, you should consider taking out employer's liability insurance if the person will be working on your premises.
Have you thought about seeing if anyone is offering an admin/bookkeeping service in your area? If there is someone doing this on a self employed basis or a company offering this service, it removes the hassle of doing your own payroll/paying someone to do your payroll, as you pay for the service, like you would pay say an accountant. This would still be a business expenses you should be able to offset against your tax.
This only works if it is someone providing the service on a professional basis and has more than one client: it is difficult to persuade the inland revenue that someone is self employed if they only have one client!
As to whether you need to set up a limited company, it is probably worth considering. You can buy a shelf company for as little as £50 - there are lots of agents that sell shelf companies and sort out the forms to make it yours. However, you do have to do an annual return - £15 per year if you file online, £30 if you do it by post. It would be a good idea to speak to an accountant as to which would be the best option for you.