FRS 105 Micro Entity Accounts in Armagh — Clear Financial Reporting for Qualifying Micro-Entities

FRS 105 is the UK Financial Reporting Standard for entities applying the micro-entities regime. It sets out how a qualifying micro-entity should prepare its annual financial statements, including the format of the balance sheet and profit and loss account and the limited notes that accompany them. It is the simplest of the UK accounting frameworks, using a historical cost basis and far fewer disclosures than standards such as FRS 102. FRS 105 applies when a company qualifies for the micro-entities regime and chooses to apply it — it is not a framework that applies to every small company by default.

FRS 105 is intended for companies that fall within the UK micro-entities regime and decide to use it. Broadly, that means very small companies that meet the applicable size conditions and are not excluded by any other rule — for example, certain types of entity are not eligible for the regime regardless of size. Meeting the size tests is a starting point rather than a guarantee, so it is worth reviewing your specific circumstances before assuming FRS 105 will apply. If your company does not qualify, or you would prefer not to use the regime, other frameworks such as FRS 102 may be more appropriate.

No. The micro-entities regime is optional. A company that qualifies for it can choose to apply it and prepare FRS 105 accounts, or it can decide to report under a fuller framework instead. Some directors prefer FRS 105 for the shorter, simpler accounts and reduced disclosure, while others want the additional detail that another standard provides. Likewise, a company that technically qualifies does not have to adopt the regime. The decision is normally reviewed as circumstances change, because eligibility and the usefulness of the framework can shift as a business grows.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the 3 applicable size conditions to fall within the micro-entities regime: turnover of no more than £1 million, a balance sheet total of no more than £500,000, and an average of no more than 10 employees during the period. Different thresholds applied to earlier accounting periods, so the dates of your period matter. Other rules and exclusions can also affect whether a company qualifies, which is why meeting the size conditions alone should not be treated as confirmation of eligibility.

FRS 102 is the general UK financial reporting standard for most companies that are not micro-entities, and it is more detailed than FRS 105. It can involve areas such as fair value measurement, deferred tax, financial instruments and a wider set of disclosures, depending on the company's circumstances. FRS 105, by contrast, is a streamlined framework built for qualifying micro-entities, with simpler measurement and far fewer note disclosures. Choosing between them is not simply a matter of size — the optional nature of the micro-entities regime means a qualifying company can still report under FRS 102 if that better suits how it is managed or what its readers need.

Companies that prepare annual accounts generally have filing obligations, and that includes companies whose accounts are prepared under FRS 105. Micro-entity accounts filed at Companies House are normally a shorter version of the full accounts, which is one of the practical benefits of the regime. Filing accounts is a separate exercise from filing a Corporation Tax Return, and the two are submitted to different bodies for different purposes. What you must file, and in what form, depends on your company's own circumstances and status, so it is worth confirming your position rather than assuming the same rules apply to every company.

Yes, they are two distinct things. FRS 105 accounts are the financial statements prepared under the micro-entities regime and used for the company's accounts reporting and filing. A CT600 is the Corporation Tax Return submitted to HMRC, which reports the company's taxable profits and calculates the tax due. The figures in the accounts often form the starting point for the tax computation, but adjustments are frequently needed, so the two documents will not necessarily look identical. Keeping the accounts and the tax position aligned makes the whole process more straightforward.

Good records make the process much easier. Typically that means your bookkeeping or accounting records for the period, bank statements, sales and purchase information, payroll details, and any invoices or receipts that support the figures. It also helps to have details of assets owned, any loans or finance agreements, information about directors' transactions with the company, and a copy of the previous period's accounts for comparison. If you are unsure what you have or how it should be organised, we can talk through it and tell you what would be most useful before preparation begins.