FRS 105 Micro Entity Accounts in Bitton Bristol

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how a qualifying company that chooses the micro-entities regime should prepare its annual financial statements, including the format of the balance sheet, the basis on which items are measured and the limited notes required. It is deliberately simpler than the standards used by larger companies, with accounts generally prepared on a historical cost basis rather than using revaluations or fair values. The result is a shorter, more proportionate set of financial statements that reflects the size and complexity of a micro-entity.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and then choose to apply it. Qualifying is not just about size: the company must fall within the definition of a micro-entity under the applicable rules, and certain types of entity and certain circumstances are excluded. On top of that, applying the regime is optional — a qualifying company can instead prepare accounts under a fuller framework if that suits it better. Because eligibility depends on your company's specific position, it is worth reviewing the criteria against your own figures rather than assuming you are either in or out.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the following 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. Meeting two of the three is the usual starting point, but it is not the whole test — other eligibility rules and exclusions can apply, and the way the conditions are measured can vary depending on the company's situation, such as in its first period of trading. This is why a quick check against your own accounts is worthwhile before deciding on a basis of preparation.

No. The micro-entities regime is an available accounting regime for companies that qualify, not an obligation. A qualifying company can choose to apply it and prepare accounts under FRS 105, or it can choose a fuller reporting framework. In practice the decision often comes down to what the accounts are used for — for example, whether lenders, investors or group companies need a particular level of disclosure. If the simpler framework meets everyone's needs, it can be a sensible and cost-effective choice; if it does not, another basis may be more appropriate.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 105 is the micro-entities standard, offering a streamlined approach with historical cost measurement and much reduced disclosure. FRS 102 is a fuller standard used by a broader range of entities, with more measurement options and considerably more disclosure requirements. A company that does not qualify for the micro-entities regime — or that qualifies but chooses not to use it — would typically look to FRS 102 instead, often under the small companies provisions. The framework you use affects the content and length of the financial statements, so it is a decision worth making deliberately.

Micro-entity accounts prepared under FRS 105 form part of a company's annual accounts, and where the company is required to file annual accounts at Companies House, those accounts are what get delivered. Because the micro-entities regime permits a simplified format, the filed version is typically a shorter balance sheet with limited notes rather than a full set of financial statements with extensive disclosures. The directors remain responsible for reviewing and approving the accounts before they are filed. Filing the accounts is a separate exercise from dealing with the company's Corporation Tax obligations, and both need to be handled.

Yes, they are two different things. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime, which set out the company's financial position and performance for the period. A CT600 is a Corporation Tax return submitted to HMRC, supported by computations that start from the accounting figures and then apply tax adjustments. The accounts do not replace the tax return, and filing the tax return does not satisfy the accounts filing requirement. In practice the two are closely linked because they draw on the same records, which is why preparing them together usually produces a more consistent result.

The main things we need are your accounting records for the period: bank and credit card statements, sales invoices and receipts, purchase invoices and expense receipts, payroll information if you employ staff, details of any assets bought or sold, loan and finance agreements, and information about any balances owed to or from directors or connected parties. It also helps to have previous years' accounts, VAT returns, and any relevant correspondence, so the figures can be checked for consistency. If your records are incomplete, that is not a barrier — we can talk through what is available and what needs to be pulled together before the accounts are prepared.