FRS 105 Micro Entity Accounts in Spalding for Qualifying Small Companies

FRS 105 is the financial reporting standard for UK micro-entities. It is a simplified framework: financial statements are prepared on a historical cost basis, the notes are kept short, and several of the more complex measurement and disclosure requirements found in larger frameworks do not apply. FRS 105 is the framework used when a company qualifies for the micro-entities regime and chooses to apply it. FRS 105 Micro Entity Accounts therefore tend to be shorter and more straightforward than accounts prepared under FRS 102.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and decide to apply it. Qualification is based on the size conditions set out in company law, and certain entities are excluded from the regime — for example, companies forming part of an ineligible group or with securities admitted to trading on a regulated market. Meeting the size tests is not on its own a guarantee of eligibility, and the regime is a choice rather than an obligation, so it is worth checking your position before deciding.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies can choose to apply it, and FRS 105 applies when that choice is made. A qualifying company may instead prepare its accounts under a different framework, such as FRS 102, which allows more detailed presentation and disclosure. The right answer depends on the company's circumstances, its stakeholders and what it wants from its financial statements.

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. Certain other rules and exclusions also apply, and the conditions are looked at in relation to the relevant financial year. It is the combination of the size tests, the exclusions and the company's own choice that determines whether FRS 105 Micro Entity Accounts are appropriate.

Both are UK financial reporting standards, but they suit different sizes of company. FRS 105 is the micro-entities framework, offering the simplest presentation and the fewest disclosures. FRS 102 is used more widely, including by small companies applying the small entities provisions within it, and allows options such as revaluation and fair value measurement that FRS 105 does not permit, along with more extensive note disclosures. Moving between the frameworks is possible, but it needs to be planned because some figures are measured differently.

Where a company prepares accounts under the micro-entities regime, it will normally need to file accounts with Companies House for that financial year, subject to the filing requirements that apply to it. Micro-entity accounts filed at Companies House are typically a shortened version of the full financial statements, and a copy of the profit and loss account is not normally filed. Filing obligations can vary, so it is worth confirming the position based on your company's own circumstances and current guidance.

Yes. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities accounting framework and are used for reporting to the company's members and, where required, filing at Companies House. A CT600 is a separate Corporation Tax filing submitted to HMRC, calculated using tax rules and adjustments that differ from the accounting treatment. The accounts usually provide the starting point for the tax computation, but the two documents serve different purposes and are filed with different bodies.

A newly incorporated company can use FRS 105 for its first set of accounts if it qualifies for the micro-entities regime for that period and is not excluded from it. First-period accounts can be affected by a longer or shorter accounting period, and the size conditions are assessed in relation to the period concerned, so it is worth checking rather than assuming. If the company qualifies and applies the regime, FRS 105 applies to those financial statements.

In practice, preparation starts with your bookkeeping: details of income and expenses, bank and cash balances, amounts owed to and by the company, payroll and director information, and any fixed assets such as equipment or vehicles. It also helps to have your previous year's accounts, details of any loans or leases, and confirmation of the accounting period and the framework used last time. With those records in place, the financial statements can be prepared and checked against the reporting requirements that apply.

Companies House has been moving towards more structured, software-based filing of accounts, and the range of filing options available to smaller companies has been under review. Because the detail and timing of these changes can affect how accounts are submitted, it is sensible to check the current guidance from Companies House before each filing, and to keep your accounting records in a format that can be used for digital filing. If your filing approach needs to change, it is best to plan for it in advance.