FRS 105 Micro Entity Accounts in Elmstead Market

FRS 105 is the UK financial reporting standard for companies that qualify for the micro-entities regime and choose to apply it. It sets out a simplified basis of preparation for the annual accounts, including how the balance sheet is presented and which notes are required. It is deliberately narrower than fuller standards: fewer accounting policy choices, fewer disclosures and a historical cost approach. FRS 105 governs the accounting and financial reporting side of your year end, and it is separate from your tax filings.

FRS 105 is available to companies that both qualify for the micro-entities regime and choose to apply it. 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 the size conditions is not the whole picture — other eligibility rules and exclusions can apply, and some companies are excluded from the regime altogether. It is worth checking your position rather than assuming, which is something we can look at with you.

No. The micro-entities regime is an available accounting regime rather than an automatic requirement. A company that qualifies may choose to apply it, and FRS 105 applies when that choice is made. Some qualifying companies prefer to prepare accounts under a fuller framework instead, often for reasons connected with lenders, investors, group reporting or the level of detail they want in the accounts. The decision affects how the financial statements look, so it is worth considering before the year end rather than after.

Both are UK financial reporting standards, but they sit at different levels of complexity. FRS 105 is the micro-entities standard, with a simplified format, limited notes and a historical cost basis. FRS 102 is the standard used more widely by small and larger entities, and it offers more accounting policy choices, more disclosure and options such as revaluation that FRS 105 does not provide. Choosing between them is a question of eligibility and preference — a company that qualifies for the micro-entities regime may still decide that FRS 102 better suits how it wants to present its results.

For a limited company, annual accounts generally do need to be filed with Companies House, and where FRS 105 Micro Entity Accounts have been prepared, those are the accounts that would be filed. Filing is a separate administrative step from preparing the accounts, with its own format and content requirements, and the requirements in this area have been changing. Your Corporation Tax Return is separate again and is submitted to HMRC, not Companies House. We can help you understand which documents go where so nothing is missed.

Yes, they are two different things. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime. A CT600 is the Corporation Tax Return submitted to HMRC, which reports the company's taxable profits and is calculated with tax rules in mind rather than accounting presentation alone. The figures in the accounts are usually the starting point for the tax computation, but adjustments are often needed, so the two documents should be prepared together even though they serve different purposes and go to different bodies.

We normally need a complete record of income and expenditure for the accounting period, bank and credit card statements, sales and purchase invoices, details of any assets bought or sold, loan and director's loan account information, stock or work-in-progress figures where relevant, and the previous year's accounts for comparison. Payroll information helps where employee numbers matter for eligibility. The more complete and organised the records are, the more straightforward the preparation tends to be, so it is worth speaking to us early about what you have and what may be missing.

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, but qualification still depends on the size conditions and any relevant exclusions rather than on the company being new. In practice, a first-year company often sits comfortably within the size limits, though that is not guaranteed and depends on its turnover, balance sheet total and average employee numbers. There can also be considerations around the first period of account, so it is worth confirming your position before preparing the first set of FRS 105 Micro Entity Accounts.