FRS 105 Micro Entity Accounts in Broxbourne

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how qualifying micro-entities prepare their financial statements, including the simplified formats for the balance sheet and profit and loss account and the limited notes that are required. It is a distinct framework from FRS 102, which is used by larger or more complex companies, and it is applied only when a company is eligible for the micro-entities regime and chooses to use it.

FRS 105 is intended for companies that fall within the UK micro-entities regime. 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. Other rules and exclusions can apply, so meeting the size conditions alone does not automatically mean a company can or should use the regime. Eligibility needs to be considered in light of the company's structure, activity and any relevant restrictions.

No. The micro-entities regime is an available accounting regime, not an obligation. A company that qualifies may choose to apply it, and FRS 105 applies when that choice is made. Some qualifying companies prefer to prepare accounts under a fuller framework such as FRS 102, often because of the way they are structured, what their lenders or investors expect, or because they want the additional disclosures that a fuller framework provides. The decision is the directors' to make, and it is worth reviewing as circumstances change.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 105 is the micro-entities standard: it uses simplified formats, requires fewer notes, and is built on a simpler measurement basis that does not permit certain fair value adjustments. FRS 102 is a more detailed framework used by small, medium and larger entities, and it generally involves more disclosures and a wider range of accounting options. In short, FRS 105 produces shorter, more streamlined accounts, while FRS 102 gives a fuller picture with more supporting information.

Where a company prepares FRS 105 Micro Entity Accounts and is required to file annual accounts, those financial statements are filed with Companies House in line with the applicable filing requirements. The accounts filed are the company's own financial statements prepared under the micro-entities regime. This is separate from tax filings: a Corporation Tax Return (CT600) is submitted to HMRC, and a Confirmation Statement is a further, distinct filing. Each obligation has its own rules and its own deadlines, so it is sensible to track them separately rather than treating them as one task.

Yes, they are separate things. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime, showing the company's profit and loss account and balance sheet. The CT600 is the Corporation Tax Return submitted to HMRC to report the company's taxable profits and calculate the tax due. The accounts usually provide the starting point for the tax computation, but the tax return involves adjustments that do not appear in the accounts, such as disallowable expenditure and capital allowances. Preparing one does not satisfy the requirement to submit the other.

A newly incorporated company can apply the micro-entities regime in its first accounting period if it qualifies under the relevant rules and the directors choose to do so. In practice, a new company often has modest turnover and few employees, but eligibility still depends on the specific conditions and any exclusions that apply, so it should not be assumed. It is worth reviewing the position at the start of the accounting period and again before the accounts are prepared, because the company's size and activity can change quickly in the early years.

Useful information includes your bookkeeping records for the accounting period, bank and credit card statements, sales and purchase invoices, payroll details, details of any assets bought or sold, stock or work in progress figures, and any loans to or from directors or third parties. It also helps to have the previous year's accounts, confirmation of your accounting period dates, and details of what has already been filed with Companies House and HMRC. If you are unsure whether your company qualifies for the micro-entities regime, giving us a rough idea of turnover, balance sheet total and employee numbers allows us to consider eligibility before any work begins.