FRS 105 Micro Entity Accounts in Cleckheaton

FRS 105 is the UK financial reporting standard that applies when a qualifying company chooses to use the micro-entities regime. It is a simplified framework, so the financial statements it produces are typically shorter and less disclosure-heavy than accounts prepared under FRS 102. It covers how the balance sheet, profit and loss account and limited notes are presented for a micro-entity, and it works alongside company law rather than replacing it.

FRS 105 is intended for companies that qualify for the micro-entities regime and then choose to apply it. Qualification depends on meeting the relevant size conditions and not falling within any of the applicable exclusions, which can include certain types of company and certain regulated or group situations. Meeting the size conditions alone does not automatically mean a company must, or can, use the regime, so it is worth checking the position against your own circumstances rather than assuming.

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: 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. These conditions sit alongside the relevant rules and exclusions, so a company that meets two or three of the thresholds may still need to consider whether anything else affects its eligibility.

No. The micro-entities regime is an available accounting regime rather than a compulsory one. A company that qualifies can generally choose whether to apply it, and FRS 105 applies when that choice is made. Some qualifying companies opt for a different framework instead, often because a lender, investor or parent company wants more detailed information than FRS 105 financial statements provide.

FRS 102 is a fuller financial reporting standard used by a much wider range of UK companies, and it typically requires more detailed disclosures and more complex accounting treatments. FRS 105 is the micro-entities framework, so it is deliberately simpler: fewer notes, a more streamlined presentation and less information overall. The two are not interchangeable — which one applies depends on whether the company qualifies for and chooses the micro-entities regime, or reports under another framework.

Where a company prepares accounts under FRS 105, those financial statements normally form the basis of the accounts filing made with Companies House, subject to the filing rules and any exemptions that apply to that company. This is separate from corporation tax: a Corporation Tax Return (CT600) is submitted to HMRC, not Companies House, and it is a distinct obligation with its own requirements. Preparing the accounts and dealing with the CT600 are two different tasks, even though the figures in each need to be consistent.

A newly incorporated company can potentially use FRS 105 for its first accounting period if it qualifies for the micro-entities regime and chooses to apply it. In practice, a first-year company with limited activity often sits comfortably within the size conditions, but eligibility still needs to be checked properly, including whether any of the exclusions apply. It is also worth planning ahead, because a company's circumstances can change as it grows.

As a starting point, we would usually need your bookkeeping records or accounting software access, bank statements for the period, details of sales and purchases, information on any assets owned by the company, and records of loans, director's balances or other liabilities. Knowing the accounting period you are reporting on, and anything unusual that happened during it, also helps. The better and more complete the records, the smoother the preparation of the FRS 105 financial statements tends to be.

No. FRS 105 relates to the accounting and financial reporting framework used to prepare a qualifying company's financial statements, while a CT600 is a separate Corporation Tax Return submitted to HMRC. The accounts and the tax return draw on similar underlying figures, but they serve different purposes, follow different rules and go to different places. Completing one does not satisfy the other.

Company filing requirements do change from time to time, and the way accounts are prepared and submitted can be affected by those changes. The size conditions relevant to the micro-entities regime have also been updated for accounting periods beginning on or after 6 April 2025. Because the detail matters and the rules can shift, it is sensible to confirm the current position for your own accounting period rather than relying on older guidance or assumptions.