FRS 105 Micro Entity Accounts in Sidcup

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how the smallest qualifying companies prepare their statutory financial statements, allowing a simplified profit and loss account, balance sheet and a much reduced set of notes compared with larger reporting frameworks. If your company qualifies for the micro-entities regime and chooses to apply it, FRS 105 is the standard your accounts are prepared under.

FRS 105 is available to companies that both qualify for the micro-entities regime and decide to apply it. Qualification is based on size conditions, but size alone is not the whole story — the regime also has its own rules and exclusions, and certain companies are not eligible regardless of how small they are. It is also a choice: a qualifying company may instead prepare accounts under a different framework, such as FRS 102 Section 1A. Because eligibility and suitability depend on the individual company, it is worth having your specific circumstances reviewed rather than assuming FRS 105 applies.

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 two of those three conditions is the starting point rather than the end of the test, because other eligibility rules and exclusions can still affect whether a company can use the regime. Conditions can also change over time, so eligibility should be reviewed for each accounting period.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies for it can choose whether to apply it, and the decision may come down to how simple its affairs are, what the directors want the accounts to show, and whether any of the simplifications under FRS 105 create problems — for example where the company holds investment property or has more complex arrangements. Many small companies find the simplified approach helpful, but the choice should be made deliberately rather than by default.

Both are UK financial reporting standards, but they are aimed at different sizes of company and offer different levels of detail. FRS 105 is the micro-entities standard and is deliberately the most simplified, with a narrower measurement basis and far fewer disclosures. FRS 102 is the wider framework used by larger entities, and its Section 1A variant is commonly used by small companies that do not use the micro-entities regime. In practice, the difference shows up in how certain items are measured and how much information the notes must contain — which is why the choice between them can affect the figures reported, not just the presentation.

Where a company prepares FRS 105 Micro Entity Accounts, those accounts form the basis of its annual accounts filing at Companies House, subject to the filing requirements that apply to the company and any exemptions it may be entitled to claim. The accounts must be prepared in line with the applicable framework first; filing is a separate step that follows. It is worth keeping your internal deadlines and your statutory filing dates clearly separated so nothing slips, particularly in the first year when the format and content of micro-entity accounts may be new to you.

Yes — they are two distinct exercises. Your FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities framework, and they generally support the accounts filed at Companies House. The CT600 is a Corporation Tax filing made to HMRC, and the taxable profit is calculated using tax rules, which can differ from the accounting figures in your accounts. Adjustments such as disallowable expenses, capital allowances and timing differences mean the two will not always match, so both need to be prepared carefully and kept consistent with one another.

A newly incorporated company can potentially use FRS 105 from its very first accounting period if it meets the eligibility conditions for the micro-entities regime and the directors choose to apply it. In the first period, the size tests are generally considered in light of the relevant rules for that period, and the figures may be affected by how long the company has been trading. New companies can also have straightforward affairs that make the simplified approach attractive, though it still pays to confirm eligibility rather than assume it, especially if the company is part of a group or has unusual transactions.

Typically we would need your bookkeeping or accounting records for the period, bank and credit card statements, sales and purchase information, expense records with supporting receipts, payroll and employee details, details of any assets and liabilities, loan or lease agreements, and any previous year's accounts. If you are a director, information about dividends, director's loans and any amounts owed to or by you personally is also relevant. The more complete and up-to-date your records are, the smoother the preparation process tends to be, and we will tell you specifically what is missing once we understand your circumstances.