To limit the risks to your home and your other assets. There are other reasons for forming a company, but ‘limited liability’ is the most important one.

The other benefits are –
Your trading name is protected by registration (provided it does not breach an existing Trade Mark registration)
You may benefit from tax breaks allowed for registered companies whose turnover falls below certain thresholds*.
You can the respect of limited company status.

* Based on information given by Inland Revenue here, the information about Corporation Tax in early 2004 was -

“The corporation tax main rate is 30%.
The small companies' rate is 19 per cent for companies with taxable profits between £50,000 and £300,000 and the starting rate is zero for companies with taxable profits of £10,000 or below.”

We are not qualified to give accountancy advice and suggest that you consult a qualified Accountant for more complete information and advice.