FRS 105 Micro Entity Accounts in Beighton: Prepared for Qualifying Micro-Entities

FRS 105 is the UK financial reporting standard that governs how micro-entity accounts are prepared. It is a simplified framework, intended for companies that use the micro-entities regime, and it sets out the recognition, measurement and disclosure requirements that apply to those accounts. In practice it produces a shorter set of financial statements than a company would prepare under a larger framework, with the balance sheet and a limited set of notes carrying most of the detail. It is the standard that applies once a company has chosen to apply the micro-entities regime — it is not a separate filing or a tax process.

FRS 105 is intended for companies that 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 the size conditions does not on its own guarantee eligibility, because other rules and exclusions can apply — for example, certain companies are prevented from using the regime regardless of their size. Eligibility also needs to be considered each year, as a company's figures can change.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies may choose to apply it and then prepare FRS 105 accounts, but it is equally entitled to prepare its accounts under a different framework, most commonly FRS 102. There can be good reasons for either route, including how the company wants its results presented and whether it needs a fuller set of disclosures for lenders, investors or internal purposes. The decision belongs to the company, and it is worth reviewing rather than assuming.

Both are UK financial reporting standards, but they are built for different sizes of company. FRS 102 is the standard used more broadly, including by small and medium-sized companies, and it involves more recognition and measurement requirements together with a fuller set of disclosures. FRS 105 is the micro-entity standard and is deliberately simpler: fewer policy choices, less disclosure, and a presentation aimed at very small companies. Because the two frameworks can treat certain items differently, the same trading year may produce different figures depending on which one is applied. If you are choosing between them, it is worth considering the effect on the numbers and not just the length of the accounts.

Where a company is required to file annual accounts, those accounts are delivered to Companies House — and if the company has prepared its accounts under FRS 105, that is the set of financial statements being filed. Filing the accounts is a separate exercise from the company's Corporation Tax obligations and from the Confirmation Statement, which is another Companies House requirement entirely. The information needed to file the accounts overlaps with what is needed for tax purposes, but the filings themselves are made separately and to different destinations.

Yes, they are two different things. FRS 105 Micro Entity Accounts concern the accounting and financial reporting framework used to prepare the company's statutory financial statements. A CT600 is the Corporation Tax Return submitted to HMRC, reporting the company's taxable profits and the tax due. The accounts often provide a starting point for the tax computation, and the two should be consistent with one another, but preparing FRS 105 accounts does not itself deal with the company's Corporation Tax filing, and filing a CT600 does not satisfy the accounts filing requirement.

A newly incorporated company can potentially use the micro-entities regime, but eligibility is not judged on the fact that the company is new. It depends on the company meeting the applicable size conditions and not being caught by any of the rules or exclusions, and in the first period there may be no prior-year figures to work from, so the position is assessed on the period in question. It is also possible for a company to move into or out of the regime as its figures change over time, which is why eligibility is reviewed for each set of accounts rather than set once at incorporation.

The starting point is a complete and tidy set of records for the accounting period: bookkeeping or accounting software data, bank statements and reconciliations, sales and purchase records, payroll and employment details, and information on what the company owns and owes at the year end, including fixed assets and any loans to or from directors. It also helps to know the company's incorporation details, the period being reported, and anything unusual that happened during the year, such as a significant purchase, a change in activity or a new source of income. The more complete the records, the more straightforward the preparation of FRS 105 Micro Entity Accounts becomes.

There is no rule that says FRS 105 accounts must be prepared by an accountant — directors are responsible for the accounts, and they can prepare them themselves. That said, the framework still has specific requirements about what is recognised, measured and disclosed, and it is easy to overlook something that matters when you are close to your own business. Many companies in Beighton choose to have their FRS 105 Micro Entity Accounts prepared professionally so that the figures are approached consistently, the presentation follows the framework, and the accounts tie back to the underlying records and to the company's other filing obligations.