Use this to restrict users from creating contacts:

from odoo import models, api, _
from odoo.exceptions import ValidationError

class ResPartner(models.Model):
    _inherit = 'res.partner'

    @api.model
    def create(self, vals):
        if vals.get('is_company') and not self.env.user.has_group('base.group_system'):
            raise ValidationError(_("You are not allowed to create companies. Please create individuals only."))
        return super(ResPartner, self).create(vals)

    def write(self, vals):
        if vals.get('is_company') and not self.env.user.has_group('base.group_system'):
            raise ValidationError(_("You are not allowed to convert a contact into a company."))
        return super(ResPartner, self).write(vals)


Optional: Hide or Disable the “Is a Company” Checkbox in the Form