FRS 105 Micro Entity Accounts in Burnham

FRS 105 is the UK financial reporting standard for micro-entities. It sets out the recognition, measurement and disclosure requirements that apply when a qualifying company chooses to prepare its annual financial statements under the micro-entities regime. Compared with larger reporting frameworks it is deliberately streamlined: measurement is largely based on historical cost, certain revaluations and fair value adjustments are not permitted, and the disclosure requirements are kept to a minimum, so the resulting accounts are shorter and simpler to read.

FRS 105 is intended for companies that qualify for the micro-entities regime and then choose to apply it. Both parts matter. Meeting the size conditions does not on its own put a company into the regime, and a company that qualifies may still decide that a fuller framework better reflects its circumstances. Eligibility also depends on the relevant rules and exclusions, some of which relate to the type of entity or the nature of its activities. Because those rules can affect the answer, eligibility is best confirmed by looking at your company's specific position rather than assuming it applies.

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. Meeting those conditions is the starting point, not the whole test — other eligibility rules and exclusions can apply, and companies close to a limit may need to consider more than one year's figures. Thresholds are also reviewed from time to time, so the conditions should be checked against the rules in force for the period being reported on.

No. The micro-entities regime is an available accounting regime, not an automatic requirement. A company that meets the size conditions can choose to use it — and FRS 105 is the standard that applies when that choice is made — but it is also possible for a qualifying company to prepare its accounts under a fuller framework instead. In practice the decision often comes down to how simple the company's affairs are, whether the directors want the shortest possible set of accounts, and whether anyone relying on the figures needs more detail than FRS 105 provides.

FRS 102 is the fuller UK financial reporting standard, with more detailed recognition and measurement rules and a longer list of required disclosures, including options such as revaluation and fair value measurement that FRS 105 does not permit. FRS 105 is the micro-entity standard and is considerably shorter: it works on a largely historical cost basis and requires far fewer notes. The practical differences show up in how assets and liabilities are measured, how much explanation accompanies the figures, and how long the finished accounts are. Which framework is appropriate depends on whether your company qualifies for, and chooses, the micro-entities regime.

The preparation of FRS 105 Micro Entity Accounts and the filing of accounts with Companies House are related but distinct steps. A company that prepares micro-entity accounts will normally file accounts with Companies House as part of its annual obligations, and the filing must be consistent with the accounts that have been prepared and approved by the directors. Filers can either submit a copy of the accounts or, where the company qualifies, file the simpler balance sheet and related notes route. The precise route and content depend on your company's circumstances, so it is worth confirming before submitting.

Yes, they are separate. FRS 105 Micro Entity Accounts are financial statements prepared under an accounting framework for the purposes of company law and reporting. A Corporation Tax Return, or CT600, is a tax filing submitted to HMRC to report the company's taxable profits and calculate the corporation tax due. The two documents are prepared for different purposes and are not interchangeable, and an accounting treatment that is appropriate under FRS 105 does not automatically determine the tax treatment. Keeping the accounting and tax workstreams clearly separated helps avoid confusion.

A newly incorporated company can certainly consider the micro-entities regime for its first set of accounts, provided it meets the applicable conditions and chooses to apply the regime. New companies often start small enough that the size conditions are comfortably met, but turnover for a first accounting period may cover more or less than twelve months, which can affect how the figures are assessed. It is also worth remembering that a first year brings other tasks alongside the accounts, so it helps to plan the bookkeeping and record-keeping early.

Typically you would provide your bookkeeping or accounting records for the period, bank statements and reconciliations, sales and purchase information, details of any loans, hire purchase or lease arrangements, payroll and employee numbers, and information on fixed assets including additions and disposals. Company details, share capital information and any relevant agreements or correspondence also help. The clearer and more complete the records, the smoother the preparation process — and if the records are patchy, we can discuss what needs rebuilding before the accounts are prepared.

Companies House filing requirements have been evolving, with a move towards more digital, software-based filing and greater emphasis on consistency between the accounts filed and the underlying information held. These changes are being introduced gradually rather than all at once, and the detail can matter. Because the requirements differ depending on the accounting period and the filing route, it is sensible to check the current position for your company's reporting period rather than relying on how accounts were filed in previous years.