FRS 105 Micro Entity Accounts in Petworth

FRS 105 is the UK financial reporting standard for micro-entities. It sets out the rules for preparing annual financial statements when a company uses the micro-entities regime, covering what is recognised in the accounts, how amounts are measured and what information must be disclosed. It is a simplified, largely historical cost framework, which makes it well suited to very small companies that want clear statutory accounts without the complexity of larger reporting standards. FRS 105 only becomes relevant if your company qualifies for the micro-entities regime and chooses to apply it.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and decide to apply it. Qualification is not automatic just because a company is small. 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. On top of the size conditions, there are other eligibility rules and exclusions that can prevent a company from using the regime — for example, certain entity types are outside its scope. Meeting the thresholds alone does not guarantee eligibility, so it is worth reviewing your specific position before deciding.

No. The micro-entities regime is an available accounting framework rather than a mandatory one. A company that qualifies may choose to apply it, but it is also possible to prepare accounts under a different standard such as FRS 102 if that better suits the business — for instance where the company wants to use fair value measurement or needs fuller disclosures. Once a framework is chosen and applied, it should be used consistently, and moving between frameworks is subject to the relevant rules. The practical question is usually which framework gives you accounts that are appropriate, understandable and proportionate for your company.

Both are UK financial reporting standards, but they are aimed at different sizes and levels of complexity. FRS 105 is the micro-entities standard and is deliberately stripped back: it works largely on a historical cost basis, does not permit revaluation or fair value accounting, and requires fewer disclosures. FRS 102 is the standard for larger small companies and other entities that fall outside the micro-entities regime, and it includes more detailed recognition and measurement requirements plus a much broader set of disclosure notes. In short, FRS 105 gives you shorter, simpler accounts; FRS 102 gives you greater flexibility and more detail, at the cost of more work.

Yes, in the normal course of events. Where a company prepares FRS 105 accounts under the micro-entities regime, those accounts generally form its annual accounts and are filed at Companies House, with micro-entity accounts able to be delivered in a simplified format. Filing obligations do vary with a company's circumstances, and some companies are exempt from filing for a particular period, so it is worth confirming your position rather than assuming. It is also important to keep this separate from your tax obligations: filing accounts at Companies House is a different requirement from submitting a Corporation Tax Return to HMRC, even though both draw on the same underlying figures.

Yes, they are two distinct filings. FRS 105 accounts are your statutory financial statements, prepared under the micro-entities regime and generally filed at Companies House. A CT600 is a Corporation Tax Return submitted to HMRC, supported by a tax computation that starts from the profit figure in your accounts and then adjusts for items treated differently for tax purposes — disallowable expenses, capital allowances and similar. The two documents follow different rules, go to different bodies and have their own deadlines. Preparing them together, from the same reliable records, helps avoid inconsistencies between what you tell Companies House and what you tell HMRC.

A newly incorporated company can potentially use FRS 105, provided it qualifies for the micro-entities regime and chooses to apply it. A first accounting period can be shorter or longer than twelve months, which affects how size conditions are assessed, and a brand-new company has no trading history to measure against. In practice, eligibility is considered on the facts and circumstances of the company, including its activities and whether any exclusions apply. If you are setting up a company in or around Petworth and want to know which reporting framework is likely to suit you from the outset, it is worth taking advice early so your records are set up in a way that supports the accounts you will eventually need.

We work from your financial records, so the more complete they are, the smoother the process. Typically that means bank and cash statements for the period, sales and purchase records, invoices, payroll and wage information, details of any assets bought or sold, loan and hire purchase agreements, stock or work-in-progress figures where relevant, and the previous year's accounts or opening balances if you are already trading. If you use accounting software, we can usually work directly from it. We will also ask about anything unusual during the period that could affect how figures are treated, so the accounts reflect what actually happened in the business rather than just the bank balance.

Companies House filing requirements are being updated as the measures in the Economic Crime and Corporate Transparency Act are brought into effect. Among the changes being introduced are a move toward software-only filing of accounts and requirements that mean more information — including profit and loss account detail — has to be submitted for small and micro-entity companies than has historically been the case. The detail and timing are being implemented through secondary legislation, and guidance continues to be updated, so the safest approach is to check the current position before you file rather than relying on how things worked a few years ago. If you file FRS 105 Micro Entity Accounts, it is worth reviewing your processes now to make sure your records can support the information that will be required.