FRS 105 Micro Entity Accounts in Buckingham

FRS 105 is the financial reporting standard published for use by micro-entities in the UK. It is a simplified framework: accounts are prepared on a historical cost basis, revaluations and fair value accounting are not permitted, and the number of disclosures required is much smaller than under a fuller standard. FRS 105 sets out how the balance sheet and profit and loss account should be measured and what notes are needed. It applies when a company qualifies for the micro-entities regime and chooses to use that regime, so the standard and the regime go hand in hand.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 applicable size conditions: 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. Meeting those size tests is not the whole story, however. Other eligibility rules and exclusions can apply, so a company that appears to fit the thresholds is not automatically able to use the regime. Eligibility is worth confirming against the rules that apply to your specific company before the accounts are prepared.

No. Qualifying for the micro-entities regime does not force a company to use FRS 105. The regime is optional, and a company that fits the criteria may still choose to prepare its accounts under another framework, most commonly FRS 102. The choice is usually made consistently across periods, because switching frameworks affects how figures are measured and presented, and can complicate comparatives. If you are unsure which route suits your company, it is best to discuss it before the accounts are put together rather than afterwards.

FRS 102 is the fuller UK standard. It offers more accounting options, including certain fair value and revaluation treatments, but it also carries more extensive disclosure requirements. FRS 105 is a stripped-back framework for micro-entities: historical cost only, simpler measurement, and minimal notes to the accounts. The practical result is that FRS 102 produces more detailed financial statements, while FRS 105 produces shorter, more streamlined ones. Neither is inherently better. The right framework depends on whether the company qualifies for the micro-entities regime, and on what the directors and other users of the accounts actually need.

Where a company is required to file annual accounts, those accounts are delivered to Companies House, and micro-entity accounts prepared under FRS 105 can be filed using the simplified format available for micro-entities. The filing obligation exists independently of which framework is used, so FRS 105 affects how the accounts are prepared rather than whether they must be filed. It is also worth remembering that the accounts filed at Companies House and the accounts prepared for the company's members can differ in the level of detail included, and that Companies House filing guidance and routes do change from time to time.

Yes, they are separate. FRS 105 Micro Entity Accounts are financial statements prepared under the micro-entities regime, while the CT600 is the Corporation Tax Return submitted to HMRC. They draw on similar underlying figures, but they are different documents going to different places: the accounts to Companies House and to the company's members, and the CT600 to HMRC, with tax adjustments made where tax rules differ from the accounting treatment. Preparing the accounts does not automatically take care of the tax return, so both should be diarised and handled as distinct pieces of work.

A newly incorporated company is not automatically a micro-entity, and using FRS 105 is a choice rather than a default. A new company can apply the regime if it meets the qualifying conditions and its directors decide to do so. First-period accounts sometimes need extra care, because the accounting period can be longer or shorter than twelve months and there may be pre-trading costs and share capital to account for. If your company has recently started trading in or around Buckingham, it is worth checking eligibility early so that your bookkeeping and records are set up in a way that supports the accounts you intend to prepare.

Typically we would ask for bank and credit card statements covering the whole period, sales and purchase records or access to your accounting software, payroll information, details of any assets bought or sold, loan and finance agreements, and stock or work-in-progress figures where these are relevant. Movements on directors' loan accounts and any dividends paid are also helpful. If a previous set of accounts exists, sending that across makes life easier. The more complete and up-to-date the records, the smoother preparation tends to be, and any gaps can usually be resolved with a quick conversation.