FRS 105 Micro Entity Accounts in Cannock Staffs

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how qualifying companies prepare their annual financial statements when they choose to apply the micro-entities regime. Compared with FRS 102, it allows a simpler, shorter set of accounts with far fewer disclosures, and it is generally based on historical cost rather than fair value. It is a reporting framework, not a tax regime, so it does not by itself determine how much Corporation Tax a company pays.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and then choose to apply it. Qualifying is not the same as being required to use it — the regime is available, not automatic. If a company meets the size conditions and no exclusion applies, the directors can decide whether the micro-entities regime is appropriate. Some companies, such as certain entities excluded from the regime, cannot use FRS 105 even if they are small. Eligibility should always be checked against the current rules before accounts are prepared.

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 size conditions is a starting point rather than a guarantee, because other rules and exclusions can also apply. If your company sits close to any of the limits, or if your circumstances have changed during the year, it is worth reviewing your position before deciding which framework to use.

No. The micro-entities regime is an available accounting regime for companies that qualify. A qualifying company may instead choose to prepare its accounts under FRS 102, which involves more disclosure but also gives access to accounting treatments that FRS 105 does not permit. Some companies prefer the extra detail, for example where a lender, investor or group parent expects it. The decision is normally made by the directors, and it is worth considering the needs of anyone who will read the accounts before choosing.

Both are UK financial reporting standards, but they are aimed at different sizes of company and differ significantly in complexity. FRS 105 is the micro-entities standard: fewer disclosures, simplified measurement, and generally a historical cost basis. FRS 102 is used by most other small companies and includes more detailed recognition, measurement and disclosure requirements, along with some accounting options that FRS 105 does not allow. In practice, FRS 105 accounts are usually shorter and simpler to read, while FRS 102 accounts give a fuller picture with more supporting notes.

Financial statements prepared under FRS 105 form part of the company's statutory accounts, and statutory accounts are filed with Companies House as part of the company's annual filing obligations. This is separate from anything submitted to HMRC. Filing requirements for small and micro-entity companies have been evolving, so it is worth checking the current position for your accounting period rather than relying on how things were done a few years ago. We can help you understand what needs to be filed and when.

Yes. FRS 105 Micro Entity Accounts are the financial statements prepared under the accounting framework, and they are filed with Companies House. A CT600 is a separate Corporation Tax Return submitted to HMRC, which deals with taxable profits, adjustments and the tax payable. Although the two are based on the same underlying records, they serve different purposes and are governed by different rules — so figures that appear in the accounts are not automatically the same as the figures on the tax return. Keeping both prepared together usually helps to avoid inconsistencies.

A newly incorporated company can potentially use FRS 105 if it qualifies for the micro-entities regime and the directors choose to apply it. In the first period of trading, the size conditions are generally assessed in line with the relevant rules for that period, and there may be exclusions that affect whether the regime is available. A first set of accounts often involves additional considerations, such as the accounting reference date, any pre-trading costs and director loans, so it is worth taking advice early rather than assuming the regime applies.

Typically we would need your bookkeeping or accounting records for the period, bank statements and reconciliations, sales and purchase information, payroll and employee numbers, details of fixed assets bought or sold, loan and finance agreements, any director's loan movements, stock or work in progress figures where relevant, and a copy of the previous year's accounts. If you are a new company, incorporation details and any opening balances or costs incurred before trading are also useful. Having these ready helps the accounts to be prepared accurately and promptly.

Companies House filing requirements have been changing, with a move towards more information being filed and greater emphasis on digital filing. For small and micro-entity companies, this can affect what is included in the accounts lodged at Companies House — for example, whether a profit and loss account is filed alongside the balance sheet. Because the detailed requirements and transition dates evolve, it is best to confirm the current position for your specific accounting period rather than rely on older guidance. We can talk you through what currently applies to your company.