FRS 105 Micro Entity Accounts in Bedford

FRS 105 is the UK financial reporting standard for micro-entities. It sets out a simplified basis for preparing annual financial statements, built around historical cost accounting with limited adjustments and significantly reduced disclosure requirements. It sits alongside other UK reporting standards, such as FRS 102, which is used by a much wider range of companies. FRS 105 only comes into play when a company qualifies for the micro-entities regime and chooses to apply it. The result is a shorter, simpler set of accounts — typically a balance sheet, a profit and loss account and a small number of notes — that still provides the information required for a micro-entity's financial statements.

FRS 105 is intended for companies that qualify as micro-entities under the UK micro-entities regime and that decide 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 automatically the whole story, because additional eligibility rules and exclusions apply, and some companies are not eligible for the regime regardless of size. If you are unsure where your Bedford company stands, it is worth reviewing your figures and circumstances before deciding which framework to use.

No. The micro-entities regime is an available accounting regime for qualifying companies, not an obligation. If your company meets the relevant criteria, you can choose to apply the micro-entities regime and prepare FRS 105 accounts, or you can prepare accounts under a different framework such as FRS 102. The right choice depends on what the accounts need to achieve — for example, whether a lender, investor or other party needs more detail than FRS 105 provides, or whether there are transactions that are better presented under a fuller framework. Once you adopt FRS 105, consistency in later periods is generally expected while you continue to qualify and choose to apply it.

The main difference is the level of complexity and disclosure. FRS 105 is a streamlined standard for micro-entities: it is based on a simple historical cost approach, permits only limited fair value adjustments, and requires very few notes to the accounts. FRS 102 is a broader standard used by small and larger entities, and it covers a wider range of accounting treatments — including areas such as revaluations, deferred tax, more detailed financial instruments and leasing — with substantially more disclosure. In practice, FRS 105 accounts are shorter and simpler to prepare, while FRS 102 accounts give a more detailed picture. Which one suits your company depends on eligibility and on what readers of the accounts need to see.

Companies that are required to file annual accounts will normally file those accounts with Companies House, and where they are prepared under FRS 105, those are the accounts that are filed. Filing is a separate administrative step from preparing the accounts, with its own requirements and deadlines based on the company's accounting reference date and its filing history. It is also distinct from your Corporation Tax obligations. Companies House filing reforms are being introduced on a phased basis and are expected to change how micro-entity accounts are submitted, moving towards software-based online filing with more information on the public record. Because the detail and timing of those changes can be updated, we can talk you through what currently applies to your company.

Yes, they are two different things. FRS 105 accounts are the company's financial statements, prepared under the micro-entities reporting framework and dealing with how the company's position and performance are presented. A CT600 is a Corporation Tax Return submitted to HMRC to report the company's taxable profits and calculate the tax due, and it is filed separately from the accounts. The figures in the accounts usually form the starting point for the tax computation, but adjustments are often needed — for example for disallowable expenses or capital allowances — so the taxable profit is not simply the profit shown in the accounts. It is worth planning both together so the numbers stay consistent.

We normally start with your accounting records for the period: bank statements and reconciliations, sales and purchase records, payroll information, details of any loans or finance agreements, asset purchases and disposals, stock or work-in-progress figures where relevant, and any previous year's accounts. It also helps to know about anything unusual during the period, such as a new source of income, a significant one-off transaction, a change in the company's activities, or a dividend or director's loan movement. Once we have a clear picture, we can prepare the accounts, check the figures reconcile, and confirm the information needed for Companies House filing and for your tax return.

A newly incorporated company can potentially use FRS 105 from its first accounting period if it qualifies for the micro-entities regime and chooses to apply it. In the first period, the size conditions are assessed on the figures for that period rather than on an average of earlier years, and the other eligibility rules and exclusions still need to be considered. A first set of accounts often involves a few extra practical questions — share capital, start-up costs, the date trading began, and the accounting reference date — so it is worth having the framework decision reviewed early rather than assuming FRS 105 applies.