FRS 105 Micro Entity Accounts in Alcester — Prepared for Qualifying Micro-Entities

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It is a simplified framework created specifically for the smallest companies, with a shorter balance sheet and profit and loss account, fewer accounting policy choices and significantly reduced disclosure requirements. It governs how the financial statements are prepared and presented — it is not a tax return, and it does not replace your other filing and record-keeping obligations. In practice, FRS 105 Micro Entity Accounts give a straightforward, accurate summary of a micro-entity's financial position and performance for the period.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and choose to apply it. For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 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. Those conditions sit within a broader set of eligibility rules, and there are exclusions — certain types of company and certain otherwise ineligible entities cannot use the regime whatever their size. Meeting two of the three thresholds therefore does not automatically mean FRS 105 is available to you. Periods beginning before 6 April 2025 are governed by the thresholds in force at that time, so the test can differ from one period to the next.

No. The micro-entities regime is an available accounting regime rather than a mandatory one. A company that qualifies can choose to adopt it and apply FRS 105, or it can prepare its accounts under a different framework, such as FRS 102. The decision is usually taken by the directors, and it can be influenced by factors such as how much disclosure the company is comfortable with, whether the accounts are used by lenders or investors, and whether any transactions fit awkwardly within the simplified rules. Because the choice affects both the figures and the notes, it is worth reviewing before accounts are prepared rather than after.

FRS 102 is the fuller UK standard and includes a reduced disclosure option for small entities, but it still allows a wide range of accounting policies and requires considerably more notes. FRS 105 is narrower and more prescriptive: it strips out many of those policy choices and generally requires assets to be measured at cost less depreciation or impairment, and it does not permit fair value accounting or revaluations. The result is a shorter, simpler set of financial statements with far less disclosure. Which framework is appropriate depends on whether the company qualifies for the micro-entities regime, whether it chooses to use it, and whether the simplifications suit the way the business actually operates.

Yes. A limited company must file statutory accounts with Companies House for its financial year, prepared under the framework it has chosen. Where the company qualifies for the micro-entities regime and prepares FRS 105 Micro Entity Accounts, it may be able to file a version of those accounts that omits certain items, so less information appears on the public record than for a small or full set of accounts. Companies House has also been introducing changes to how accounts are filed, including a move towards filing in a structured digital format through software. Requirements and timings can change, so it is worth checking the current guidance before you file.

Yes, and the two should not be confused. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime and filed at Companies House. A CT600 is a Corporation Tax filing submitted to HMRC, which is based on the company's taxable profits rather than simply the accounting profit shown in the accounts — adjustments, capital allowances and disallowable expenses can all create a difference. HMRC filing obligations have their own deadlines and their own supporting computations. Keeping the accounts and the tax return coordinated helps avoid inconsistencies between what you report to Companies House and what you report to HMRC.

Potentially, yes. Eligibility is based on the company's size and on whether it falls within any of the exclusions — not on how long it has been trading. A newly incorporated company with little or no trading history will usually need to think about expected turnover, the expected balance sheet total and average employee numbers, and about how a first accounting period that is longer or shorter than twelve months affects the assessment. A new company can also choose not to use the micro-entities regime even where it qualifies. It is worth reviewing the position early, because it shapes the format of your first set of accounts.

We need a clear picture of the company's transactions and balances for the period. In most cases that means your bookkeeping or ledger, bank statements and reconciliations, sales and purchase records, payroll information, details of fixed assets and any depreciation, stock or work in progress figures, loan and hire purchase agreements, director's loan account movements, share capital details and any previous accounts. It also helps to know about anything unusual — a change in activity, a significant one-off transaction, or a period that is not the standard twelve months. If any records are incomplete, we will tell you what is missing so it can be sorted before the accounts are finalised.