FRS 105 Micro Entity Accounts in Gateshead

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how qualifying companies that choose to use the micro-entities regime should prepare their statutory financial statements. Compared with a fuller framework, FRS 105 is simpler: accounts are prepared on a historical cost basis, revaluations and fair value accounting are not used, deferred tax is not recognised, and the required notes are limited. It is a financial reporting standard, not a tax regime, so it governs how the accounts are prepared rather than how much tax a company pays.

FRS 105 is available to companies that qualify for the UK micro-entities regime and decide to apply it. Qualifying is about size, and there are also exclusions and other rules that can affect whether a company is eligible. It is not limited to any particular type of trade or sector, and a small Gateshead company should look at its own figures rather than assume it either does or does not qualify. Because the test is specific, it is worth checking your position with someone who prepares accounts under this framework regularly.

No. Being small enough to qualify under the micro-entities regime does not force a company to use FRS 105. The regime is an option, and within it FRS 105 is the standard that applies when that option is taken. A qualifying company may instead prepare accounts under a fuller framework if that suits its circumstances better — for example, if it needs more detailed information, has more complex transactions, or has a lender or investor who expects a fuller set of statements. The important thing is that the choice is made deliberately and applied consistently.

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. Meeting these size conditions is the starting point, not the whole answer — other eligibility rules and exclusions can also apply, and the position needs to be looked at for each accounting period because a growing company can move out of the regime. Older thresholds that you may see quoted online are out of date and should not be relied on.

Both sit within the UK accounting framework, but they are aimed at different sizes of company. FRS 105 is the micro-entities standard: it is the most streamlined option, built around historical cost and a much shorter set of disclosures. FRS 102 is the standard used by larger small companies and others, and it allows or requires more accounting treatments and considerably more disclosure — for example around financial instruments, fair value and deferred tax. In practice, the choice usually comes down to which regime the company qualifies for and can use, and how much detail the accounts genuinely need to carry.

Statutory accounts prepared under FRS 105 are still statutory accounts, so they need to be filed at Companies House in line with the filing requirements that apply to your company. Using the micro-entities regime does not remove the filing obligation — it affects how the accounts are prepared and how much they disclose. The filing itself is a separate step from preparing the accounts, and it is also separate from anything submitted to HMRC. It is worth keeping your accounts and your filing dates in view together so nothing is overlooked.

Yes. FRS 105 accounts are financial statements prepared under an accounting framework; a CT600 is a Corporation Tax return submitted to HMRC to report the company's taxable profits and work out the tax due. The figures in the accounts typically form the starting point for the tax computation, but adjustments are often needed, and the two documents are prepared for different purposes and sent to different places. Having tidy, well-prepared FRS 105 financial statements makes the tax return easier to put together, but it does not replace it.

We normally need your bookkeeping records or accounting software data for the period, bank and credit card statements, sales and purchase invoices where relevant, details of any assets bought or sold, loan and hire purchase agreements, stock or work in progress figures, payroll information, and the previous year's accounts for comparison. If your company has anything unusual during the period — a director's loan, a grant, a one-off transaction — let us know so it can be treated properly. The more complete the records, the more straightforward the preparation, and we can tell you exactly what is missing once we have seen what you have.