FRS 105 Micro Entity Accounts in Basingstoke

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how qualifying micro-entities prepare their annual accounts, and it is deliberately simpler than the standards used by larger companies. In practice that means fewer disclosure requirements, a shorter set of financial statements and less choice over accounting policies, which reduces the cost and complexity of preparing year-end accounts for a small company.

No. FRS 105 applies when a company qualifies for the micro-entities regime and chooses to apply it. Qualifying companies have a choice about which reporting framework to use, and some directors prefer a different framework even where the micro-entities regime is available to them. FRS 105 is therefore an option for qualifying companies rather than something that applies automatically to every small business that happens to fall under the size thresholds.

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. There are also other rules and exclusions that can affect whether a company qualifies, and some company types are excluded altogether. Meeting the size thresholds on their own does not automatically confirm eligibility, so it is always worth checking the full position for your company.

Both are UK accounting frameworks, but they are designed for different sizes of company. FRS 102 is a fuller standard covering recognition, measurement and disclosure in more detail, and it allows more accounting policy choices. FRS 105 is the micro-entities standard, offering a much more streamlined set of financial statements with limited notes. A company using FRS 105 typically produces simpler accounts, while an FRS 102 company reports more extensively. Which one applies depends on whether the company qualifies for and chooses the micro-entities regime.

The financial statements a company prepares for its members are also the basis for the accounts it files at Companies House, subject to the filing requirements that apply to that company. Filing accounts is a separate administrative step from preparing them, with its own rules about format and content. It is also entirely separate from your Corporation Tax obligations, which are dealt with through HMRC rather than Companies House. We can help you understand how the prepared accounts feed into the filing process.

Yes, they are two distinct things. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities accounting framework. A CT600 is a Corporation Tax Return submitted to HMRC, which deals with the company's tax position for the period. The accounts often provide the starting point for the tax return, but they serve different purposes, go to different bodies, and have their own requirements. Preparing accounts does not in itself settle your Corporation Tax position.

A newly incorporated company can potentially use FRS 105 if it meets the criteria for the micro-entities regime and the directors choose to apply it. New companies often start small, but eligibility still depends on the full set of rules rather than simply being new. There may also be practical questions in the first period about what records need to be kept and how transactions should be treated. It is worth discussing your circumstances early so the right framework is used from the outset.

Broadly, we need a clear picture of the company's financial activity for the period. That usually means bookkeeping records or a listing of income and expenses, bank and credit card statements, invoices and receipts, details of any assets owned such as equipment or vehicles, information on any loans or amounts owed to and by the company, and details of share capital. If you use accounting software, granting access can speed things up considerably. Anything that explains an unusual transaction or a balance on the records is always helpful too.

Companies House filing requirements for small and micro-entities have been evolving, with a move towards filing more information than in the past — including profit and loss figures for many companies. The detail and timing of what applies to any individual company can vary, so it is worth checking the current position rather than relying on how things worked a few years ago. We can talk you through what the changes are likely to mean for your company's accounts and filing.