FRS 105 Micro Entity Accounts in Chorley

FRS 105 is the UK financial reporting standard that applies to the micro-entities regime. It sets out how micro-entity accounts should be prepared and is deliberately short and simple compared with the main UK GAAP standards. In practice, it means a streamlined balance sheet, a simplified profit and loss account and far fewer disclosure notes, which keeps the financial statements proportionate to the size of the business. FRS 105 applies to a company when that company qualifies for the micro-entities regime and chooses to use it.

No. Qualifying for the micro-entities regime does not mean a company has to use it. A company that meets the eligibility conditions can either choose to apply the micro-entities regime and therefore prepare FRS 105 accounts, or it can prepare its accounts under a different framework, such as FRS 102. The decision is usually made with the company's wider needs in mind — for example, whether a lender, investor, group parent or other interested party expects a fuller set of accounts with more disclosure.

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. Meeting those size conditions is not the whole picture, however. Other rules and exclusions apply, and some companies are excluded from the micro-entities regime regardless of their size. That is why eligibility is best confirmed by looking at your specific circumstances rather than assuming the regime applies.

FRS 102 is the main UK GAAP standard and is used by a much wider range of companies, including small companies that apply Section 1A. FRS 105 is a separate, shorter standard written only for micro-entities. The two differ in measurement and disclosure: FRS 105 offers simpler measurement with fewer accounting policy choices and significantly reduced disclosure, while FRS 102 permits more options and generally requires more notes to the accounts. Neither is inherently better — the right one depends on the company's size, its eligibility and what the users of the accounts need to see.

Where a company is required to file annual accounts, the accounts prepared under FRS 105 are the accounts that get filed at Companies House. Filing the accounts is a separate exercise from filing a Confirmation Statement, which simply confirms that the company information held by Companies House remains correct, and separate again from your Corporation Tax Return. If you are unsure whether your company is required to file accounts for a particular period, or whether any exemption applies, that is something to check rather than assume.

Yes — they are two different documents prepared for two different purposes. FRS 105 Micro Entity Accounts are the financial statements for the period and are filed at Companies House where required. A CT600 is the Corporation Tax Return submitted to HMRC. The tax return usually starts from the figures in the accounts, but it is not simply a copy of them: adjustments such as disallowable expenditure, capital allowances, and losses brought forward can mean the taxable profit differs from the accounting profit. Keeping the two clearly separate helps avoid confusion about what has been filed and with whom.

A newly incorporated company can use FRS 105 if it qualifies for the micro-entities regime and chooses to apply it. A new company has no trading history, so eligibility is generally considered in light of what is expected for the first accounting period, and the position is reviewed as the business develops. Many new companies start out on the micro-entities regime and move to a different framework later if turnover, balance sheet total or employee numbers grow beyond the size conditions.

Filing requirements for company accounts continue to evolve. Companies House has been introducing reforms under the Economic Crime and Corporate Transparency Act, which include a move towards accounts being filed using commercial software rather than paper or PDF submissions. Those changes are being phased in over time, with different timescales applying to different sizes and types of company, so it is worth checking the current guidance from Companies House rather than relying on what applied in previous years. Because the detail can change, we are happy to talk through what it means for your FRS 105 Micro Entity Accounts in Chorley when we prepare them.