FRS 105 Micro Entity Accounts in Dagenham: Prepared for Qualifying Micro-Entities

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how the financial statements of a qualifying micro-entity should be prepared and what information they need to disclose, and it is deliberately simpler than the standards used by larger companies. It sits within the UK micro-entities regime: the regime governs who qualifies, and FRS 105 is the standard that applies when a qualifying company chooses to use it. In practice, FRS 105 accounts tend to consist of a balance sheet and a short set of notes, prepared on a historical cost basis with limited measurement options.

FRS 105 is intended for companies that qualify for the micro-entities regime and decide to apply it. Qualifying depends on the applicable size conditions and on the company not being excluded by other rules — for example, certain types of entity and certain regulated or group situations are treated differently. Meeting the size conditions does not by itself guarantee eligibility, and using the regime is a choice rather than a requirement, so eligibility should be reviewed before accounts are prepared. A company in Dagenham with simple trading or service activities is often a candidate, but the specifics always matter.

No. The micro-entities regime is an available framework that qualifying companies may choose to apply — it is not imposed automatically. A company that qualifies as a micro-entity can elect to prepare its accounts under FRS 105, or it may prepare them under a different UK standard such as FRS 102 instead. The decision can be influenced by what the directors or shareholders want from the accounts, whether a lender or investor expects a particular level of disclosure, and whether the company's transactions are simple enough for the reduced disclosure framework to tell the story accurately.

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 are the size tests, and other eligibility rules and exclusions can still apply on top of them, so meeting two or three of the conditions does not automatically confirm that the micro-entities regime is available to a particular company. Thresholds and rules can change, so the criteria should be checked against the specific accounting period in question before accounts are prepared.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 102 is the main framework for most UK companies and carries a much broader set of recognition, measurement and disclosure requirements, including some fair value and revaluation options. FRS 105 is a reduced framework for micro-entities, built on the recognition and measurement principles of FRS 102 and adapted for simpler reporting, with far fewer disclosures and restricted measurement choices. The result is that FRS 105 accounts are shorter and more straightforward to prepare, but they may offer less detail than a lender or investor might expect to see. Choosing between them depends on eligibility and on what the users of the accounts need.

Yes — where a company prepares accounts under FRS 105, those accounts still need to be filed with Companies House in line with the applicable filing requirements for the period. Filing accounts is a separate obligation from filing a Confirmation Statement, and separate again from your tax affairs. A Corporation Tax Return (CT600) is submitted to HMRC, not Companies House, and it is calculated on the company's taxable profits rather than being a copy of the accounts. Although the two documents start from the same records and should be consistent, they are prepared for different purposes and submitted to different bodies, so both need to be dealt with on their own terms.

A newly incorporated company can potentially use FRS 105, but it depends on whether it qualifies for the micro-entities regime for its accounting period and whether it chooses to apply it. A first accounting period can be shorter or longer than 12 months, which may affect how the size conditions are assessed, and a company that expects to grow quickly may want to think ahead about whether the framework will still suit it in future periods. It is worth reviewing the position early in the company's life so the first set of accounts is prepared on a sensible basis from the outset.

The usual starting point is a complete set of records for the accounting period: bookkeeping or accounting software exports, bank and credit card statements, sales and purchase invoices, payroll information, and details of loans, hire purchase agreements and significant asset purchases or disposals. It is also useful to have your previous year's accounts, any relevant correspondence from Companies House or HMRC, and a note of anything unusual that happened during the period. The clearer the records, the more straightforward it is to prepare FRS 105 financial statements that properly reflect the company's position and to keep the accounts consistent with the figures used for tax.