FRS 105 Micro Entity Accounts in Brierley

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how qualifying companies that choose to apply the micro-entities regime prepare their annual financial statements, including how items are measured, what the balance sheet and profit and loss account should show, and the very limited notes that are required. It is deliberately simpler than fuller frameworks such as FRS 102, but it is still a formal accounting standard that must be followed correctly.

No. Qualifying for the micro-entities regime and choosing to use it are two different things. A company that meets the size conditions is generally able to apply the regime, but it can also decide to prepare accounts under a fuller framework instead. FRS 105 applies when the micro-entities regime is the route chosen. Directors should consider whether the simplified reporting is suitable for their circumstances — for example, if lenders, investors or group companies expect more detailed information, a different framework may be more appropriate.

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. These are the headline size tests, and other eligibility rules and exclusions can apply — for instance, certain company types are not able to use the regime regardless of size. Meeting the size thresholds alone does not automatically guarantee eligibility, so it is worth checking your specific position before assuming FRS 105 is available.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 105 is a stripped-back framework for micro-entities, with a shorter balance sheet format, a simplified profit and loss account and minimal disclosure. FRS 102 is a fuller framework used by small, medium and larger entities, and it generally requires more detailed accounting policies, more disclosures and more judgement in areas such as financial instruments and deferred tax. FRS 105 is quicker and cheaper to prepare, but it gives readers less information — which matters if someone outside the company relies on the accounts.

Where a company prepares FRS 105 Micro Entity Accounts for its statutory annual accounts, those accounts normally need to be filed with Companies House in line with the company's filing obligations. The accounts are prepared for the company's members and then delivered as part of the statutory filing process. This is a separate exercise from submitting a Corporation Tax Return to HMRC, and separate again from a Confirmation Statement, which confirms company information rather than reporting financial results.

Yes, they are separate. FRS 105 accounts are the company's financial statements, prepared under the micro-entities reporting framework. A CT600 is the Corporation Tax Return submitted to HMRC to report taxable profits and calculate the tax due. The accounts are usually the starting point for the tax return, but adjustments — such as disallowable expenses or capital allowances — mean the taxable profit is often not identical to the accounting profit, and the two documents are filed with different bodies for different purposes.

A new company can use FRS 105 if it qualifies for the micro-entities regime and chooses to apply it. In the first period there is no prior-year history to test against, so eligibility is assessed on the figures for that period, alongside any other rules and exclusions that apply. Many small companies start out within the size conditions, but it is worth reviewing the position each year, because a company that grows beyond the criteria may need to move to a different reporting framework.

Typically we need complete records for the accounting period: bank and credit card statements, sales and purchase records, payroll information, details of any assets bought or sold, loan and director's loan account movements, and any prior-year accounts. We also need to know whether the company has any unusual transactions, related companies or group relationships that could affect eligibility. The cleaner and more complete the records, the more straightforward the preparation — and the easier it is to explain the resulting figures to you.

No. Statutory accounts are one of several obligations. Depending on the company's circumstances, there may also be a Corporation Tax Return, a Confirmation Statement, and other notifications to HMRC such as payroll submissions. Each has its own content, its own purpose and its own recipient. Keeping the accounts, the tax position and the company record consistent with one another is part of good compliance housekeeping, and it is worth planning the filings together rather than treating them as unrelated events.