FRS 105 Micro Entity Accounts in Cheadle Hulme

FRS 105 is the UK financial reporting standard for companies that use the micro-entities regime. It sets out how the smallest qualifying companies prepare their financial statements, allowing a simpler balance sheet and profit and loss account with far fewer notes than fuller reporting standards. It is deliberately stripped back, with figures generally kept at historical cost, so that very small companies can report accurately without producing disclosures that are not relevant to them.

FRS 105 is available to companies that qualify for the micro-entities regime and choose to apply it. Qualification depends on meeting the relevant size conditions and on the company not being excluded from the regime — for example, certain types of entity are not eligible regardless of size. Qualifying is a starting point rather than an instruction: a company that qualifies may still decide to use a fuller framework such as FRS 102 if that better suits its circumstances.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that meets the size conditions may choose to apply it, in which case FRS 105 governs the accounts, but it is equally entitled to prepare accounts under FRS 102 if that is more appropriate. The decision is usually based on the level of disclosure the directors want, the expectations of lenders or investors, and how the company intends to use its accounts.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the following 3 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 during the period. Meeting two of the three does not guarantee eligibility on its own, because other rules and exclusions can apply, and the conditions must be assessed for the correct period. It is worth confirming your position before deciding which framework to use.

Both are UK accounting standards, but they are aimed at different sizes of company and offer different levels of detail. FRS 105 is the most streamlined option, with a short balance sheet, a profit and loss account and minimal notes, and it does not permit fair value accounting. FRS 102 is a fuller framework used by larger small companies and others, requiring more disclosures and allowing more accounting policy choices. In practice, the choice often comes down to how much information the users of your accounts need.

FRS 105 Micro Entity Accounts are the company's statutory financial statements for the period, so where a company is required to file accounts, they are filed with Companies House in the usual way, alongside any other filings that apply to it, such as a Confirmation Statement. The filing obligation comes from company law rather than from FRS 105 itself — the standard determines how the accounts are prepared, not whether they must be delivered.

Yes, they are distinct. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime and filed with Companies House. A CT600 is a Company Tax Return submitted to HMRC to report the company's taxable profits and work out the Corporation Tax due. They draw on much of the same financial information, but they serve different purposes, go to different organisations and follow different rules, so one does not replace the other.

A newly incorporated company can potentially use FRS 105 for its first accounting period if it qualifies as a micro-entity and is not excluded from the regime, and if the directors choose to apply it. In the first period the company may not have a full prior-year comparison, and there can be questions about how turnover and employee numbers are assessed over a shorter period. It is worth reviewing the position before the first set of accounts is finalised.

We normally need a complete record of the period's income and expenditure, bank and credit card statements, sales and purchase invoices, details of any assets owned by the company, information on loans, directors' balances and share capital, plus any VAT or payroll records. Previous year's accounts and the trial balance from your bookkeeping software are also helpful. If you keep digital records, we can often work directly from those, which reduces the back-and-forth.

Company filing requirements do change from time to time, and reforms affecting how accounts are filed and what must be included have been introduced in recent years. Because the detail and timing of these changes matter, the safest approach is to check the current position for your specific period before you prepare or file, rather than relying on older guidance. We can talk you through what applies to your company's accounting period and what it means for your FRS 105 Micro Entity Accounts.