FRS 105 Micro Entity Accounts in Smallfield

FRS 105 is the UK financial reporting standard for micro-entities. It sets out the recognition, measurement and disclosure requirements that apply when a qualifying company chooses to prepare its annual accounts under the micro-entities regime. Compared with fuller frameworks, it is deliberately short and simplified: a condensed balance sheet, a limited set of notes and a profit and loss account presented in the permitted format. FRS 105 is not a tax regime and it does not replace your Corporation Tax Return — it is about how the financial statements themselves are prepared.

FRS 105 is available to companies that qualify for the UK micro-entities regime and choose to apply it. Qualifying is about size, but also about the rules and exclusions that sit around the regime — some companies are excluded regardless of their size, and certain types of entity are not eligible. Meeting the size conditions does not, on its own, guarantee that the regime is available to you. Because the detail matters, it is worth checking your company's specific position before deciding, rather than assuming that being small means FRS 105 is the answer.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies may choose to apply it and prepare FRS 105 accounts, or it may choose a different framework, such as FRS 102 (including the small-company provisions in Section 1A). The decision often comes down to what the directors need from the accounts — for example, whether lenders, investors or group arrangements require a particular level of disclosure. Once a framework is chosen, it should be applied consistently and reflected in the financial statements for that period.

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 during the period. These conditions are assessed under the relevant rules, which include provisions for companies in their first period and for those whose circumstances change. Size limits are only part of the picture — other eligibility rules and exclusions can apply, so satisfying 2 of the 3 conditions does not by itself confirm that the micro-entities regime is available.

Both are UK financial reporting standards, but they are aimed at different sizes and needs. FRS 105 is the micro-entities standard: it is much shorter, offers fewer accounting policy choices, permits a simplified balance sheet and profit and loss account, and requires far less disclosure. FRS 102 is the wider framework used by small, medium and larger entities, with more measurement options, fair value possibilities and significantly more notes. In practice, the choice affects how your accounts look and how much detail they contain, so it is worth considering who will read them before deciding which framework suits your company.

Yes — a company that prepares accounts, including FRS 105 Micro Entity Accounts, still needs to file its annual accounts with Companies House as part of its statutory obligations. Micro-entity accounts are typically filed in a simplified form, and the filing itself is a separate step from preparing the financial statements. Filing accounts with Companies House is also distinct from submitting a Corporation Tax Return (CT600) to HMRC, even though both draw on the same underlying records. The two submissions serve different purposes and are made to different bodies.

Yes, they are separate. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime, while a CT600 is the Corporation Tax Return submitted to HMRC to report the company's taxable profits and calculate the tax due. Although both are built from the company's financial records, the figures are not automatically identical — tax adjustments, capital allowances and other timing differences can mean the taxable profit differs from the accounting profit. Filing accounts and filing a CT600 to HMRC are two distinct obligations with their own requirements.

In most cases we will need your accounting records for the period, such as bookkeeping entries or a trial balance, together with bank statements and reconciliations, sales and purchase records, payroll information, details of any fixed assets acquired or disposed of, and records of loans, grants or director transactions. Your previous year's accounts are helpful for opening balances and comparatives, and it is useful to know about anything unusual that happened during the period. Once we know what you already have, we can tell you exactly what is missing and how best to fill any gaps.

A newly incorporated company may be able to use FRS 105 for its first accounting period if it qualifies for the micro-entities regime and the directors choose to apply it. First-period eligibility is judged under the specific rules that apply to newly formed companies, which look at the period in question rather than a full historical trading record. Because the exclusions and conditions still apply, it is worth reviewing your company's circumstances before committing to a framework, particularly if you expect turnover or staff numbers to grow and you would prefer to keep your reporting approach consistent from the outset.