FRS 105 Micro Entity Accounts in Liversedge

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out a simplified basis for preparing annual accounts, with a shorter balance sheet, profit and loss account and set of notes than larger frameworks require. It is issued as part of the UK's financial reporting standards and applies when a qualifying company has chosen to use the micro-entities regime rather than a fuller framework such as FRS 102.

FRS 105 is intended for companies that qualify as micro-entities and then choose to apply the micro-entities regime. That means meeting the relevant size conditions and not falling within any of the exclusions or special rules that can apply. 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 those conditions is a starting point rather than a guarantee, so eligibility is worth confirming for each accounting period.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A qualifying company can instead prepare its accounts under a fuller framework, such as FRS 102, if its directors prefer. The decision is usually made period by period, and consistency across periods matters. Many very small companies choose FRS 105 because the accounts are shorter and simpler, but the choice should reflect what the business and its stakeholders actually need.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 applicable 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. Alongside those size conditions, other rules and exclusions can affect whether a particular company can use the regime, and the conditions may need to be assessed on more than one year's figures. Because of that, meeting the size thresholds on their own does not automatically mean a company qualifies.

FRS 102 is a fuller UK financial reporting framework, and small companies often use its small-entities provisions. FRS 105 is more streamlined: measurement is simplified, options such as revaluation and certain fair value treatments are not available in the same way, and far fewer disclosures are required. In practice, FRS 105 accounts are shorter and more straightforward, which suits very small companies, while FRS 102 provides more flexibility for businesses whose arrangements do not fit comfortably within the simplified rules.

Yes. Companies that are required to prepare and file annual accounts normally file them at Companies House, and micro-entity accounts can be delivered in a simplified format. The filing obligation and the date it falls due depend on your company's accounting reference date and its particular circumstances, so it is worth checking your own deadline rather than assuming a standard date. Filing the accounts at Companies House is a separate exercise from any Corporation Tax filing.

Yes, they are two different things. FRS 105 accounts are the financial statements prepared under the micro-entity framework, and they are filed at Companies House. A CT600 is a Corporation Tax Return submitted to HMRC to report the company's taxable profits. Both often start from the same underlying records, but tax rules can require adjustments that do not appear in the accounts — for example, depreciation add-backs and capital allowances — so the figures in the two documents will not always match.

A newly incorporated company may be able to use the micro-entities regime if it meets the relevant size conditions and is not affected by any exclusion, but this should not be assumed. First-period accounts can raise particular questions, such as how the size conditions are assessed for the period, and it is sensible to confirm the position before the accounts are prepared. If FRS 105 is not appropriate, a different framework can be used instead.

Useful starting points include your bookkeeping records, bank and credit card statements, sales and purchase invoices, payroll information, details of any loans or hire purchase agreements, purchase and disposal records for equipment or vehicles, stock figures where relevant, and a copy of the previous year's accounts if there is one. Director's loan balances and any amounts owed to or by the company should also be clear. The smoother the records, the quicker the accounts can be put together and the fewer questions we need to come back on.

Companies House has been introducing changes under the Economic Crime and Corporate Transparency Act, including a move towards filing accounts through software rather than paper or simpler web routes, and changes to the information that can or must be filed. Small and micro-entity accounts are affected by these developments. Because the detail and timings continue to evolve, it is worth checking the current Companies House guidance for your filing, and we can talk through how the changes are likely to affect your own accounts.