FRS 105 Micro Entity Accounts in Bexleyheath

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how the annual accounts of a micro-entity are prepared, including how the balance sheet and profit and loss account are presented and what limited notes are required. It is deliberately simpler and shorter than the standards used by larger companies, which is why it is popular with very small limited companies. It is an accounting framework, not a tax return, and it does not determine how much Corporation Tax you owe on its own.

It is available to companies that qualify as micro-entities under the UK micro-entities regime and that choose to apply that regime. Qualifying is not the same as being required to use it — it is an option. For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 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. Other eligibility rules and exclusions can apply, so meeting the size conditions alone does not automatically settle the question.

No. The micro-entities regime is an available accounting regime rather than a mandatory one. A company that qualifies can choose to apply it and prepare FRS 105 accounts, or it can prepare accounts under a different framework, such as the small companies regime. In practice, the choice often comes down to how much disclosure the directors want or need, and whether anyone relying on the accounts — a lender, for example — would prefer more detail. It is worth reviewing the decision each year, because circumstances change.

For accounting periods beginning on or after 6 April 2025, the size conditions are 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. A company generally needs to meet at least 2 of these 3 conditions. That is only the size test, however. The regime also has its own rules about which companies can use it and which are excluded, and there can be additional considerations depending on your company's history and structure. Because of that, eligibility is best confirmed by looking at your specific position rather than relying on the thresholds alone.

FRS 102 is the financial reporting standard used by most other UK companies, and it is considerably more detailed. FRS 102 generally involves more disclosures, more accounting policy choices and, in some cases, fair value measurement. FRS 105 is much simpler: fewer notes, a more straightforward approach to measuring assets and liabilities, and a shorter set of financial statements overall. If your company qualifies for the micro-entities regime and does not need the extra detail, FRS 105 can reduce the time and cost involved in preparing the accounts — but FRS 102 may be more appropriate if more detailed reporting is wanted or required.

For most companies, yes — the annual accounts, prepared under whichever framework applies, are filed at Companies House. Preparing the accounts and filing them are two connected but distinct steps: the accounts are prepared first, and the filing follows. If you use us, we can help with both. It is worth remembering that the accounts are a separate filing from your Confirmation Statement, and separate again from your Corporation Tax obligations.

Yes, they are entirely separate. FRS 105 Micro Entity Accounts are the statutory financial statements prepared under the micro-entities reporting framework. A CT600 is the Corporation Tax Return submitted to HMRC, and it deals with taxable profits and tax adjustments rather than financial reporting presentation. The two are related in the sense that the accounts are usually the starting point for working out taxable profit, but they are prepared for different purposes, filed with different bodies, and on different timelines. Filing micro-entity accounts does not, by itself, discharge your Corporation Tax obligations.

A newly incorporated company can potentially use the micro-entities regime from its first accounting period if it meets the relevant conditions for that period and chooses to apply it. New companies often do meet the size conditions simply because they are starting small, but the wider eligibility rules still need to be checked — a new company is not automatically a micro-entity just because it is new. If you have just incorporated in or around Bexleyheath, it is worth reviewing the position early so your first set of accounts is prepared on a consistent basis from the start.

The core information is your financial records for the period: bookkeeping or accounting software reports, bank and credit card statements, sales and purchase records, payroll information, and details of assets purchased or disposed of. It also helps to have details of any loans, hire purchase agreements, director's loan account movements, stock or work in progress, and the previous year's accounts if there are any. The more complete and tidy the records, the smoother the preparation tends to be, and the easier it is to spot anything that needs clarifying before the figures are finalised.