FRS 105 Micro Entity Accounts in Warwick

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sits within UK GAAP and is intentionally simpler than the standards used by larger companies. Assets and liabilities are generally measured at historical cost, with no fair value or revaluation options, the range of accounting policies is narrow, and the required notes are far fewer. The result is a shorter, more proportionate set of financial statements. The framework governs how the figures are measured and what is disclosed; it does not replace the separate rules about what must be delivered to Companies House or how the company's tax position is worked out.

No. The micro-entities regime is an available accounting regime that qualifying companies may choose to apply, rather than something imposed on them. If your company qualifies, the directors can decide whether to use FRS 105 or to prepare the accounts under another framework, most commonly FRS 102 including the small companies regime. What matters is that the choice suits the company, is applied consistently, and is properly reflected in the accounts and any statements the directors make. In practice we look at your circumstances, explain the practical differences, and then prepare the accounts on the agreed basis.

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 during the period. Meeting the size conditions is not the whole test. Other eligibility rules and exclusions apply, and some companies cannot use the regime whatever their size. The average employee figure is calculated on a basis set by the legislation, and periods that are not a full 12 months can affect how the limits are applied. We check the position for the specific period before confirming that FRS 105 is available.

The main differences are simplicity and disclosure. FRS 105 is written for micro-entities, so it offers fewer accounting policy choices, simpler measurement and a much shorter set of notes. FRS 102 is used by a far wider range of companies, including small companies preparing accounts under the small companies regime, and it contains more extensive recognition, measurement and disclosure requirements along with options that FRS 105 does not permit. FRS 105 accounts tend to be shorter and less costly to prepare, but they also carry less information for lenders, investors or anyone else reading them. If a company grows beyond the micro-entity conditions, it will need to move to a different framework.

Yes. FRS 105 accounts are the company's statutory annual accounts, so once they have been prepared and approved by the directors they are filed with Companies House for the financial year in the usual way. It helps to keep two things separate in your mind: the accounting framework determines how the figures are measured and what is disclosed, while the filing rules determine what must be delivered and by when. The version filed at Companies House may be presented differently from the accounts prepared for the members and from the figures used for tax. Filing the accounts is not the same as settling any Corporation Tax position.

Yes, they are separate requirements. FRS 105 Micro Entity Accounts are prepared under the financial reporting framework and form the company's statutory accounts. A CT600 is a Corporation Tax Return submitted to HMRC, and it is built on the company's taxable profits after tax adjustments rather than simply on the accounting profit shown in the accounts. The accounts provide the starting point, but a tax computation will typically apply capital allowances, disallowable expenditure and other adjustments. Preparing FRS 105 accounts does not itself file a CT600, and filing accounts at Companies House does not discharge any Corporation Tax obligation.

It may be able to, provided it qualifies as a micro-entity and the directors choose the micro-entities regime — being newly incorporated neither rules it in nor rules it out automatically. A first accounting period can be longer or shorter than 12 months, and that can affect how the size conditions are assessed. A company that has not yet started trading still needs to think about its reporting position and any exclusions that might apply. We would look at the first period figures, the company's structure and its activities before confirming whether FRS 105 is a suitable basis for the opening accounts.

We normally need the company's accounting records for the period: sales and purchase records, bank and credit card statements, payroll information if the company employs anyone, details of loans, hire purchase or lease agreements, asset purchases and disposals, and any stock or work in progress at the period end. VAT returns or management accounts that have already been prepared are helpful, as are the previous year's accounts and a trial balance. If the bookkeeping is incomplete, that is not a barrier — we can talk through what needs to be brought up to date and agree the most practical way forward before the accounts are drafted under FRS 105.