FRS 105 Micro Entity Accounts in Airdrie: Simple, Accurate Reporting for Qualifying Companies

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 annual accounts, and it is intentionally simpler than the standards used by larger businesses. Accounts prepared under FRS 105 follow a historic cost basis, so assets are generally held at cost rather than revalued or measured at fair value, and the notes to the accounts are much shorter than those required under fuller frameworks. It still produces a proper set of financial statements — a balance sheet, a profit and loss account and supporting notes — but with less disclosure than a larger company would provide.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and choose to apply it. Qualification depends on the company meeting the relevant size conditions and not falling within any of the applicable exclusions, which can affect certain types of company and some companies that sit within a group. Meeting the size tests is not on its own a guarantee that the regime is available, so eligibility should be checked against the company's specific circumstances and the rules for the accounting period in question. If a company does not qualify, or prefers a fuller framework, FRS 102 or another applicable standard would be used instead.

No. The micro-entities regime is an available accounting framework rather than a mandatory one. A company that qualifies may choose to apply it, and FRS 105 applies once that choice is made. Some qualifying companies instead prepare accounts under FRS 102, often because they want fuller disclosure, because a lender or investor has asked for it, or because planned changes — such as joining a group or seeking investment — make a larger framework more suitable. It is worth thinking about the framework before the year end so that the records and any decisions during the year line up with the basis you intend to report on.

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. Earlier accounting periods were subject to lower limits, so the period you are reporting on matters. Passing the size tests is only part of the picture — other eligibility rules and exclusions can apply, and some companies are prevented from using the regime regardless of size. Because the rules are specific, it is sensible to confirm eligibility for your own period rather than assume it.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 105 is the micro-entities standard: it uses a historic cost basis, does not permit revaluation or fair value measurement, and requires relatively little disclosure in the notes. FRS 102 is the standard used by small and larger entities that fall outside the micro-entities regime, and it offers more accounting options alongside a substantially greater volume of disclosure. In practice, FRS 105 keeps the year-end shorter and less detailed, while FRS 102 can give a fuller picture that lenders, investors or group companies sometimes prefer. The right choice depends on eligibility and on what the company needs from its accounts.

Yes — annual accounts are filed with Companies House, and micro-entity companies are generally able to file a simplified set of accounts rather than a full set. The filing rules for small and micro-entity companies have been changing, including a move towards digital, software-based submission and changes to what is filed. Because the position depends on the accounting period and current requirements, it is worth confirming the exact filing basis for your year end. Filing accounts with Companies House is separate from your Corporation Tax obligations, which are handled through HMRC.

Yes, they are two distinct filings. The FRS 105 Micro Entity Accounts are the company's financial statements, prepared under the micro-entities regime and filed at Companies House. The CT600 is a Corporation Tax Return submitted to HMRC, showing the company's taxable profits and the tax due. They are based on the same underlying records and should tell a consistent story, but they serve different purposes, go to different organisations and follow different rules — which is why tax adjustments are usually explained separately from the accounts themselves. Preparing both together tends to reduce the risk of inconsistencies between them.

A newly incorporated company can potentially use FRS 105 if it qualifies for the micro-entities regime and chooses to apply it, but the test is applied to its own circumstances rather than to the fact that it is new. A first accounting period can be longer or shorter than 12 months, and trading may not have started immediately, so the size conditions and any applicable exclusions need to be looked at carefully. It is also worth planning ahead, since a company that grows — or that joins a group — may move out of the regime in a later period. Discussing the framework early makes the first set of accounts much easier to prepare.

Usually the starting point is complete bookkeeping for the period, supported by bank and credit card statements, sales and purchase records, payroll information, and details of assets, loans, leases or one-off transactions. Stock, work in progress, and any amounts owed to or by the company also need to be established at the period end. Where a previous set of accounts exists, the opening figures and any brought-forward balances are useful context. Each company is different, so the exact list depends on how the business operates — but providing records promptly and flagging anything unusual early helps ensure the accounts are prepared accurately and without unnecessary back-and-forth.