FRS 105 Micro Entity Accounts in Holywell

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It is deliberately shorter and simpler than the standards used by larger companies, with reduced disclosure requirements and simpler measurement rules, and it produces financial statements tailored to a small, straightforward business. FRS 105 applies only where a company both qualifies for the micro-entities regime and chooses to apply it — it is not the default framework for every limited company, and it is not a tax return.

FRS 105 is intended for companies that qualify as micro-entities and choose the micro-entities regime. Qualification depends on the applicable size conditions being met and on the company not being caught by the other eligibility rules and exclusions. Many small trading companies may qualify, but the position has to be checked against the company's own facts — its turnover, balance sheet total, employee numbers, group structure and the nature of its activities. If a company qualifies but would prefer fuller reporting, it can use a different framework instead.

No. The micro-entities regime is an available accounting regime, not a requirement. A company that is eligible can choose to apply it, and FRS 105 is the standard that applies when it does. Some eligible companies prefer to use FRS 102 instead, perhaps because a lender, investor or group parent wants more detail, or because the company has transactions that the simpler framework handles less helpfully. What matters is that the framework chosen is appropriate for the company and applied consistently, so it is worth thinking about the longer term before deciding.

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 during the period. Those conditions sit alongside other eligibility rules and exclusions, so meeting the size tests does not automatically make a company a micro-entity, and the company must also decide to apply the regime. Where a company sits close to a threshold, it is sensible to review the position for each period rather than assuming eligibility continues.

FRS 102 is the wider UK standard used by most companies, with Section 1A providing a reduced-disclosure version for small entities. FRS 105 goes further in simplifying reporting: it has fewer disclosure requirements and simpler measurement rules, and some options available under FRS 102 are not available at all — for example revaluing certain assets or using fair value, and deferred tax is not recognised. The result is usually a shorter, more straightforward set of accounts. FRS 102 may be the better fit where more detail is wanted, where the company has more complex transactions, or where a third party expects a fuller set of financial statements.

Yes — they are two different filings. FRS 105 Micro Entity Accounts are the statutory financial statements prepared under the micro-entities regime and, where the company has a filing obligation, they are sent to Companies House. A CT600 is the Corporation Tax Return submitted to HMRC to report taxable profits and work out the tax due, usually supported by a tax computation that starts from the accounts but then applies tax rules. The figures should be consistent, but preparing accounts and preparing a tax return are separate tasks with separate deadlines set by different bodies.

Typically we would ask for your bookkeeping or accounting records for the period, bank statements and reconciliations, sales and purchase records, payroll information so the average employee number can be confirmed, details of fixed assets and any disposals, loan and lease agreements, stock or work-in-progress figures where relevant, details of directors' loans and dividends, and the previous period's accounts. If the company is newly formed, incorporation details and any opening balances are useful too. The more complete and up-to-date the records are, the fewer queries tend to arise while the accounts are being prepared.

Companies House filing requirements have been changing under the Economic Crime and Corporate Transparency Act 2023, and further reforms are planned that may require small and micro-entity companies to file more information than they do today — including a profit and loss account, which many currently choose to omit. The timing and exact detail have been the subject of consultation, so the current position should always be checked against the latest Companies House guidance. Because these changes can affect what appears on the public record, it is worth planning ahead and keeping your accounting records in a state that supports fuller reporting if it is needed.