FRS 105 Micro Entity Accounts in Barnet Herts

FRS 105 is the UK financial reporting standard for companies that use the micro-entities regime. It sets out how those companies prepare their annual financial statements — what the balance sheet and profit and loss account should look like, how figures are measured, and how much has to be disclosed. It is the simplest reporting framework available in the UK, which is why it is popular with small owner-managed companies, but it still requires the accounts to be prepared accurately from the company's underlying records rather than estimated.

FRS 105 is intended for companies that both qualify for the 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 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 the whole story, however — other eligibility rules and exclusions can apply, and certain types of entity are not able to use the regime at all. Because of that, eligibility should be checked properly against your company's own position rather than assumed.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies can choose to apply it and prepare FRS 105 accounts, or it can prepare accounts under another framework such as FRS 102. The directors make that decision. In practice, companies sometimes prefer a fuller framework because they want additional disclosures, have more complex transactions, or have a lender, investor or group parent that expects more detail. The choice is worth revisiting periodically, because it should reflect the company as it is now, not as it was when it first started filing.

FRS 105 is the micro-entities standard, while FRS 102 is the standard used by most other small and medium-sized companies (often in its Section 1A form for small companies). FRS 105 is more restrictive and more prescriptive: it generally works on a historical cost basis, does not permit revaluation or fair value measurement of the kind FRS 102 allows, and requires fewer disclosures. It also uses a simpler, shorter format for the balance sheet and profit and loss account. FRS 102 gives more flexibility in measurement and more scope for presenting information, but it also asks for considerably more disclosure in the notes.

FRS 105 accounts are the company's statutory financial statements, and in the ordinary course a company that is required to file accounts will file them at Companies House. This is a separate exercise from filing a Corporation Tax Return, which goes to HMRC, and from filing a Confirmation Statement. The deadline for filing accounts depends on your accounting reference date and the type of company, and Companies House publishes the current rules, so it is worth checking the position that applies to your company rather than assuming a particular timescale.

Yes, they are separate. FRS 105 Micro Entity Accounts are the financial statements, prepared under the micro-entities reporting framework. A CT600 is a Corporation Tax Return submitted to HMRC to report the company's taxable profits and calculate the tax due. The two documents serve different purposes, go to different bodies, and are prepared under different sets of rules — accounts are shaped by accounting standards, while the tax return follows tax legislation. The accounts are often the starting point for the tax computation, but the figures in the return will not simply mirror the accounts.

A newly incorporated company can use FRS 105 if it qualifies for the micro-entities regime and the directors decide to apply it. Being new is not, by itself, a barrier — but a first-year company should still be assessed against the size conditions and the other eligibility rules, and a company with unusual transactions, group relationships or regulated activity may find the regime is not available or not suitable. In the first period the accounts may also cover more or less than twelve months, which affects how the figures are presented.

Useful starting points usually include your bookkeeping records or accounting software data for the period, bank and credit card statements covering the full accounting year, sales and purchase records, payroll information and details of any directors' loans or salaries, a list of fixed assets and any additions or disposals, details of loans, leases and hire purchase agreements, stock or work in progress figures where relevant, and any previous year's accounts. If some records are incomplete, that is not usually a reason to delay a conversation — it simply helps to know early so the gaps can be identified and dealt with.