FRS 105 Micro Entity Accounts in Brighton — Prepared for Qualifying Micro-Entities

FRS 105 is the UK financial reporting standard that applies to the micro-entities regime. It sets out how a qualifying micro-entity prepares its annual financial statements when it chooses to use that regime, and it is deliberately more streamlined than the standards used by larger companies. Rather than requiring extensive disclosure, FRS 105 focuses on a concise set of financial statements, typically a balance sheet supported by a limited number of notes. It is an accounting and reporting framework: it governs how the accounts are prepared, not how much tax the company pays.

FRS 105 is available to companies that qualify for the micro-entities regime and choose to apply it. Qualifying is about more than size alone — there are additional rules and exclusions, so some companies that appear small on paper may not be able to use the regime. A newly incorporated company may be able to apply it for an early period if it meets the relevant conditions, and there are rules covering what happens when a company moves in or out of the regime over time. Because eligibility depends on your specific circumstances, it is worth checking your position before assuming FRS 105 applies.

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 its accounts under a fuller framework, such as FRS 102 Section 1A for small companies. The right choice depends on the company's circumstances: its size, its transactions, whether directors want more detailed information in the accounts, and whether lenders, investors or other parties need a particular level of disclosure. Selecting the regime is a decision, not a default.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the 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. Those conditions are subject to the relevant rules and exclusions, and meeting them does not automatically guarantee that the micro-entities regime is available — other eligibility requirements can apply. The conditions also need to be considered in relation to the accounting period concerned, so it is worth reviewing your figures each year rather than relying on an old assessment.

Both are UK financial reporting standards, but they serve different sizes of company. FRS 105 is the micro-entities standard: it offers fewer accounting policy options and requires less disclosure, which keeps the accounts shorter and simpler. FRS 102 is the standard used by larger companies, with Section 1A providing a small-companies variant that still requires more disclosure and offers more measurement choices than FRS 105. In short, FRS 105 is the leaner option and FRS 102 gives a fuller picture. Which one applies to your company depends on which regime it qualifies for and chooses.

Yes. Where a company prepares accounts under FRS 105, those statutory accounts still need to be filed with Companies House for the relevant accounting period, in the form permitted for micro-entity accounts. Micro-entity accounts filed at Companies House are typically shorter than accounts filed under other frameworks, and the regime permits certain simplifications in what is delivered to the register compared with what the company prepares for its own records and for tax purposes. Filing the accounts is a separate obligation from your Corporation Tax responsibilities, and both need to be dealt with.

Yes, they are separate. FRS 105 accounts are the statutory financial statements prepared under the micro-entities regime and filed at Companies House. A CT600 is a Corporation Tax Return submitted to HMRC to report the company's taxable profits and calculate the Corporation Tax due. They are prepared for different purposes, go to different bodies, and are submitted through different processes. The figures are connected, because the accounts are usually the starting point for the tax computation, but adjustments are often needed — so it is a mistake to treat the accounts as though they were the tax return.

A reasonable starting point is a complete set of records for the accounting period: bank statements for all company accounts, sales invoices or summaries, purchase and expense records, payroll information, details of any loans or finance agreements, purchases or disposals of equipment and vehicles, and stock or work-in-progress figures where relevant. It also helps to have the company's registration details, share capital information, details of any transactions with directors, and the previous year's accounts if the company has traded before. The cleaner and more complete the records, the more straightforward the preparation tends to be.