FRS 105 Micro Entity Accounts in Alnwick

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how a qualifying micro-entity prepares its annual financial statements, and it is deliberately simpler than the standards used by larger companies — it is based on historical cost, avoids much of the fair value and revaluation complexity, and requires a much shorter set of notes. It is the framework, not a filing service, so it tells you how the accounts should be drawn up rather than where they go.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and then choose to apply it. Qualifying is a matter of size plus the wider eligibility rules, and there are exclusions that can rule a company out even where it looks small on the numbers. It is not a framework that any company can simply opt into, and qualifying for the regime does not oblige a company to use it — applying the micro-entities regime, and therefore FRS 105, is a decision the directors make.

No. Qualifying for the micro-entities regime and choosing to use it are two different things. A company that meets the size conditions may still decide to prepare its accounts under a fuller framework, and some companies prefer to do so because of the way they are managed, financed or reported on internally. What matters is that the framework actually used is applied consistently and correctly, and that the accounts are prepared on a proper basis.

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. Meeting those size conditions is not by itself the whole story, because other eligibility rules and exclusions can apply depending on what the company is and what it does. Because the detail matters, it is worth having your own figures checked against the current rules rather than assuming.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 102 is the standard used by most small and medium-sized entities and allows for more recognition and measurement options, including fair value in certain circumstances, along with a fuller set of disclosures. FRS 105 is the micro-entities standard: it is narrower, more prescriptive and considerably shorter. The trade-off is simplicity against flexibility — FRS 105 gives you less to disclose but also fewer accounting choices.

The financial statements a company prepares are used for its statutory accounts filing, and micro-entity accounts can be filed with Companies House in the permitted format. That filing obligation is separate from the company's tax position and separate from its Confirmation Statement, which covers different information. Filing requirements for small and micro-entity accounts are changing, so it is sensible to check the current position for your own accounting period before you file, rather than relying on how things were done a few years ago.

Yes, they are two different things. FRS 105 Micro Entity Accounts are the company's statutory financial statements, prepared under the accounting framework and filed with Companies House. A CT600 is a Corporation Tax Return submitted to HMRC, which deals with the company's tax computation and liability. The accounts usually provide the starting point for the tax computation, which is why it makes sense to prepare them together so the figures line up, but the two documents serve different purposes and go to different places.

A newly incorporated company can use the micro-entities regime if it qualifies and the directors choose to apply it, and because there is no prior trading history to measure, the assessment is usually straightforward in the first period. What matters is that the company genuinely falls within the regime and that its records are good enough to prepare the accounts from. Where a company expects to grow, or where it has investors or lenders who want more detail, it is worth thinking about the framework choice early rather than switching later.

Typically you would need your bookkeeping records or a full transaction listing for the period, bank and credit card statements, sales and purchase records, payroll information and employee numbers, details of any equipment or other assets bought or sold, loan and hire purchase agreements, and any director's loan account movements. Stock or work in progress figures, VAT returns and the previous year's accounts are also useful. The clearer the records, the more efficiently the accounts can be prepared and the less time is spent on queries.