FRS 105 Micro Entity Accounts in Allesley

FRS 105 is the UK financial reporting standard used to prepare micro-entity accounts. It applies when a company qualifies for the micro-entities regime and chooses to apply it. The standard is intentionally streamlined: it sets out a simplified balance sheet format and a small number of notes, and it removes many of the disclosures required under fuller frameworks. It is an accounting and reporting framework rather than a tax rule, so applying it does not by itself change a company's Corporation Tax position.

FRS 105 is available to companies that meet the definition of a micro-entity and that elect to use the micro-entities regime. 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. Other eligibility rules and exclusions can also apply, so satisfying the size conditions is not, on its own, confirmation that FRS 105 is available or the right fit for your company.

No. The micro-entities regime is optional. A company that qualifies may choose to apply it, and if it does, FRS 105 is the standard used to prepare the accounts. A qualifying company could instead prepare its accounts under another applicable framework, such as FRS 102 Section 1A, which involves more disclosure. The decision usually comes down to the company's circumstances, who relies on the accounts, and what the directors want to get out of them.

FRS 102 is the main financial reporting standard for UK companies, and its Section 1A provides a reduced disclosure framework for small companies. FRS 105 is narrower and simpler still, and it is available only to qualifying micro-entities. FRS 105 accounts carry fewer notes and a more compact presentation, and the framework places limits on certain measurement choices — for example, revaluation of certain assets is not available and deferred tax is not recognised. In practice, a company that grows beyond the micro-entity conditions, or one whose lenders or investors want more detail, may be better served by FRS 102.

Where FRS 105 accounts are prepared as the company's statutory annual accounts, they feed into the company's annual accounts filing with Companies House. That is a different obligation from the Confirmation Statement, which confirms company details rather than reporting financial results. Micro-entity accounts filed at Companies House typically include the balance sheet and notes, and qualifying companies may be able to omit the profit and loss account from the filed copy, even though the full accounts still need to be prepared properly for the members. Companies House has also been updating its filing processes, so it is worth checking the current requirements before you file.

Yes, and the distinction matters. FRS 105 accounts are the financial statements prepared under the micro-entities regime. A CT600 is a Corporation Tax return submitted to HMRC and is prepared under tax legislation rather than the accounting framework. The accounts normally provide the starting point for the tax computation, but tax adjustments are then applied and the return is filed with HMRC rather than Companies House. Preparing FRS 105 accounts does not, by itself, settle the company's Corporation Tax obligations.

A newly incorporated company in Allesley can use FRS 105 if it qualifies for the micro-entities regime and chooses to apply it. In a first accounting period there are no prior-year figures to compare against, so eligibility is generally considered using that period's figures and the relevant rules. Because a new company's circumstances can change quickly — a large first contract, extra staff, or a significant equipment purchase — it is sensible to review the position each year rather than assuming the same framework will always apply.

In most cases we will ask for your bookkeeping or accounting records for the period, bank and credit card statements, sales invoices and expense records, payroll or staff cost information, and details of any assets, liabilities, loans or director's transactions. If you have previous accounts, we will normally want those too. Clear, complete records make the preparation process smoother and reduce the number of queries raised along the way, so it helps to keep your bookkeeping reasonably up to date through the year rather than leaving everything until the accounts are due.