What is the Cost of Micro Entity Accountsin the UK?

If you are a small UK business, you need to understand the cost of the micro entity accounts to manage compliance and control the budget for your business. Microentity accounts are designed for small companies that need simplified reporting. Although micro-entity accounts reduce paperwork and disclosure, many business owners want to know the cost of micro-entity accounts. This guide explains the costs, what affects pricing, and how a business can keep expenses low while ensuring compliance with Companies House and HM Revenue and Customs (HMRC).

What are Micro-Entity Accounts?

Micro entity accounts are the simplest form of statutory accounts for the UK’s smallest companies. These accounts allow you to file less information with Companies House and HMRC, reducing the administrative burden. Additionally, they offer benefits such as audit exemption by using simplified formats (FRS 105). Most limited companies must file a Company Tax Return (CT600) with HMRC and pay Corporation Tax if applicable. However, the options are open for micro-entities in the case of statutory accounts. Remember, to qualify as a micro-entity, you must meet the following conditions:

• A turnover of £1 million or less
• The balance sheet must have £500,000 or less
• 10 employees or fewer

Micro-entity accounts are filed with Companies House and follow the FRS 105 accounting standard. This reduces the level of detail required in public filings. And because of the simplified structure, the cost of micro entity accounts is often cheaper to prepare than small or medium company accounts.

How Do Micro Entity Accounts Work?

As mentioned above, micro entity accounts are simplified accounts for the smallest limited companies. In micro entity accounts, you file very short accounts with Companies House. You do not need a profit and loss statement for public filing, and these accounts have much less detail than small company accounts. However, you still need to keep full internal accounting records for HMRC.

What is the Cost of Micro Entity Accounts in the UK?

The cost of micro entity accounts varies depending on how you prepare them.

Accountant Fees

In the UK, most accountants charge a fixed fee for micro entity accounts. The cost depends on the services you want. Typically, you pay an accountant to prepare and file your micro-entity accounts with Companies House. Big firms may charge more like £700 to £1,000 or more if CT600 tax returns and bookkeeping are included. Moreover, the cost increases if the records are complex or incomplete.

Bookkeeping Costs

Bookkeeping is an ongoing process that includes the daily recording of financial transactions. It includes tracking income, expenses, and bank reconciliation. You can do bookkeeping yourself or outsource it. Although outsourcing reduces the accounting stress, it costs you more than DIY filing.

Software Costs

The cost of micro entity accounts also depends on the software cost. If you prepare accounts yourself using software, the cost ranges from £0 to £100/year. The software pricing depends on the subscription tier and the number of users or features. Visit the official HMRC website to see the list of HMRC-compatible software. You can find the software that works with the Corporation Tax filing software.

Companies House Micro Entity Filing Fee

There is usually no separate Companies House fee for filing annual micro-entity accounts, but businesses must still pay the annual Confirmation Statement fee and may incur an accountant's fee. Additionally, if micro-entities are using HMRC CT600 software for filing, it can incur software costs.

Cost of Preparing Micro Accounts

For basic preparation, the cost of preparing micro-entity accounts typically ranges from £150 to £600 per year. Remember, the cost can change based on location and complexity. Services, including Value Added Tax (VAT) and tax returns, can reach £500 to £1,000. However, costs increase if your records are poorly organised. If you want to go deeper, read our guide How to Prepare Micro Entity Accounts and understand all the details regarding preparing and the cost of micro entity accounts.

What Is the Incorporation Cost of Micro Entity Accounts?

In the UK, when you set up a company, you must pay a one-time incorporation fee to Companies House to register your business. The incorporation fee is £100 when you apply online or through software. And if you use premium same-day services and apply through software, the incorporation fee increases to £156. Nevertheless, if you submit a paper application by post, it costs you £124, and it usually takes longer to process. Both options legally create your company as a separate entity, but most businesses choose the online option because it is quicker and more convenient.

Factors Affecting the Cost of Micro Entity Accounts

The price of micro-entity accounts depends on several factors, including:

• Whether bookkeeping services are included
• Whether payroll management or VAT is included
• Number of transactions, including sales and expenses
• Whether CT600 tax returns are included
• Firm size and the experience of accountants
• Level of services and advice provided

Note: Microentity accounts are simple, but if your records are incomplete and poorly recorded, the complexity increases the cost.

Hidden Costs of Microentity Accounts to Watch

The cost of micro entity accounts isn’t just the main fee you pay for preparing accounts. There can be additional costs on top. Some extra costs you might encounter are:

VAT Returns

If your business is VAT registered, you must file VAT returns. And, accountants charge more for this service.

Late Filing Penalties

If you miss the deadline for filing tax returns or filing accounts, fines are charged. These penalties increase the longer you delay.

Bookkeeping Services

It is important to keep accurate records of your accounts. If you don’t organise them, an accountant may charge to manage your transactions. Remember, this is separate from year-end accounts.

Payroll Processing Fee

If you pay yourself through Pay As You Earn (PAYE) or have employees, there may be monthly charges for handling payslips, salaries and HMRC submissions.

Confirmation Statement Fee

In the UK, every company must file an annual confirmation statement with Companies House, and there is a small filing fee.

The Final Word

The cost of micro entity accounts is affordable compared to larger company accounts. This is because micro-entity accounts have simplified reporting under FRS 105. Moreover, it reduces disclosure requirements and makes preparation quicker. Most small businesses in the UK can expect to pay from £300 to £800 annually with an accountant. However, you can bring the cost down significantly by filing through Companies House yourself. Finally, the right choice depends on your time availability, how complex your business transactions are, and your expertise with accounting. If your company has simple transactions, you can reduce costs heavily. But with professional help, you can reduce the risks of errors. Therefore, if you want to simplify your company accounts and reduce accounting costs, you are at the right place. At MicroentityAccounts, we have the most affordable plans starting from £5+ VAT. We help you save time, stay compliant, and avoid mistakes by automating most of the routine accounting work for your micro-entity accounts. Additionally, we don't have any hidden costs and keep the costs simple and predictable. So, don’t wait and get an instant quote today! Disclaimer: The information provided on MicroEntityAccounts.co.uk is for informational purposes only and should not be considered as financial advice. Always consult with a professional accountant to ensure compliance with UK laws and regulations.