Tool Diameter and Machine Limits.

Is the tool diameter taken into account with error "outside mahine limits"?

I wish to surface a spoilboard and have generated G-code with travel lines based on the machine limits - assuming that the cutter would travel on those limits ok, but cut the tool's radius beyond those limits - so the surfacing would go a little beyond the limits. I am getting the "out of machine limits" error. Do I need to reduce my pocket size to subtract the tool dimension so it only cuts to the limit lines?