One of the main reasons for using a limited company is literally to limit your exposure to legal issues. For example, if your agency messes up, doesn't get paid by the client and decides to sue you for the money, you simply declare your company bankrupt and open a new one. If you're self employed, you just sell your house and car, declare bankruptcy and go live under a bridge.
No, this didn't happen to me, but someone I know.
Biting the hand that feeds IT
