FRS 105 Micro Entity Accounts in Backworth

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how the annual accounts of a qualifying company should be prepared when that company has chosen to apply the micro-entities regime. It is deliberately short and simple: a limited set of primary statements and far fewer notes than a fuller framework would require, with some measurement simplifications built in. FRS 105 is the accounting standard; the micro-entities regime itself comes from UK company law. The two work together — the regime makes the option available, and FRS 105 tells you how to prepare the accounts once it is used.

FRS 105 is available to companies that qualify for the micro-entities regime and choose to apply it. In broad terms, a company needs to be small enough to fall within the regime's size conditions and must not be caught by any of the exclusions, which can include certain company types and activities such as some financial and investment businesses. Because exclusions are based on what the company is and does, not just on its size, a company can meet every size test and still not be eligible. It is worth confirming your position before assuming FRS 105 applies — especially for a new or recently restructured company in Backworth.

No. The micro-entities regime is an accounting regime that qualifying companies may choose to use; it is not imposed automatically. A company that qualifies can decide to use the micro-entities regime and therefore FRS 105, or it can apply a fuller framework instead. That choice often comes down to who will read the accounts and what they need from them — a lender or investor may want more detail than a micro-entity set of accounts provides. The decision is normally reviewed each year, because your circumstances, and the framework you are eligible for, can change.

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. These are the headline size tests, and other rules and exclusions also apply — meeting the size conditions alone does not automatically mean your company qualifies, and some companies are excluded regardless of how small they are. If your company is part of a group, or operates in a sector with specific restrictions, the position can be more involved.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 105 is the micro-entities standard: minimal disclosures, simplified measurement, and a short set of financial statements. FRS 102 is the standard for larger small companies and other entities, and it requires considerably more disclosure, recognises more items and gives a fuller picture of the business. In practice, FRS 105 is cheaper and quicker to prepare, while FRS 102 produces accounts that are more informative to lenders and investors. Neither is inherently better — the right one depends on what your company qualifies for and what the accounts need to do.

Where a company prepares FRS 105 Micro Entity Accounts, those accounts normally form part of the company's annual accounts that are filed at Companies House, although the accounts filed may be a version of what the directors approve and the filing requirements depend on the company's circumstances. Filing accounts with Companies House is separate from filing a Corporation Tax Return with HMRC, and separate again from a Confirmation Statement. Each has its own purpose and its own submission route. We can help you keep track of which documents go where so nothing is missed.

Yes, they are entirely separate filings. FRS 105 Micro Entity Accounts are financial statements prepared under the micro-entities framework and are generally filed at Companies House. A CT600 is a Corporation Tax Return submitted to HMRC to report the company's taxable profits and calculate the tax due. The two draw on the same underlying records, so they should tell a consistent story, but they are not the same document and neither replaces the other. Companies normally need to deal with both, along with a Confirmation Statement, as part of their annual compliance cycle.

Possibly, but it is not automatic. A newly incorporated company has no trading history, so eligibility in the first period is usually assessed on its expected or actual figures for that period, and it must also clear the exclusions that apply to its type of business. Many small, straightforward new companies do end up able to use the micro-entities regime and therefore FRS 105, but whether that is the right choice for yours depends on your plans — for example, if you expect to raise finance or bring in investors, a fuller framework may serve you better from the outset.

We normally need your bookkeeping or accounting records for the period, bank statements and reconciliations, sales and purchase records, payroll information if you employ staff, details of any assets bought or sold, loan and director's loan account balances, stock or work-in-progress figures where relevant, and any previous year's accounts. We also need the company's basic details and accounting period dates, and a note of anything unusual that happened in the year. The cleaner and more complete the records, the smoother the process — the framework reduces disclosure but it does not remove the need for accurate underlying figures.