FRS 105 Micro Entity Accounts in Chesterfield

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It provides a simplified set of recognition and measurement rules — for example, assets and liabilities are generally carried at cost rather than revalued — along with much shorter disclosure requirements than the fuller standards used by larger companies. When people talk about FRS 105 Micro Entity Accounts, they mean a set of financial statements prepared under this framework. It is an accounting standard, so it shapes how the accounts are put together and what is disclosed; it is not a tax return and it does not determine how much Corporation Tax a company pays.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and that choose to apply it. Qualification depends on the size conditions that apply to the company, and other eligibility rules and exclusions can also be relevant — for instance, certain types of company, or companies within particular kinds of group, may be excluded. Meeting the size conditions alone does not automatically mean a company can use FRS 105, which is why it is worth checking your specific circumstances rather than assuming. If your company qualifies and the regime is chosen, FRS 105 becomes the framework used to prepare the annual accounts.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies for it can choose to apply it, and where that choice is made, FRS 105 applies to the accounts. A qualifying company may instead decide to prepare its accounts under a fuller framework such as FRS 102, which may suit businesses that want to present more detailed information, follow particular accounting treatments, or align with the expectations of lenders or investors. The decision is usually worth taking deliberately, because it affects what the accounts look like and what is disclosed, and switching frameworks later has consequences.

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 during the period. These thresholds need to be considered alongside the wider rules and exclusions that sit around the micro-entities regime, including the position of parent and subsidiary companies and certain regulated or specialised businesses. The size conditions are a starting point for the assessment, not the whole test, so it is sensible to have your eligibility reviewed against your actual figures before committing to FRS 105.

FRS 102 is the general financial reporting standard for most UK companies, while FRS 105 is the much shorter standard written for those using the micro-entities regime. In practice the differences show up in measurement and disclosure: FRS 105 does not permit fair value accounting or revaluation in the way FRS 102 does, it takes a simpler approach to areas such as deferred tax and financial instruments, and it requires far fewer notes to the accounts. FRS 105 financial statements are therefore leaner and usually quicker to prepare, but they also give readers less information. FRS 102 offers more flexibility and detail, which some companies need for their own reasons even where FRS 105 would be permitted.

FRS 105 accounts form the company's annual accounts, and annual accounts are generally filed at Companies House as part of the company's statutory filing obligations, subject to the requirements that apply to that company. Alongside the accounts themselves, the filing arrangements — including how the accounts are delivered and what the company must confirm — are set by Companies House rather than by the accounting standard. It is worth noting that the filing framework for small and micro-entity companies has been changing, with Companies House moving towards digital filing through compatible software, so it is wise to check the current guidance before you file rather than relying on how things were done in previous years.

Yes — they are two different things. FRS 105 Micro Entity Accounts are the company's financial statements, prepared under the micro-entities reporting framework and generally filed at Companies House. A Corporation Tax Return (CT600) is the separate return submitted to HMRC to report the company's taxable profits and work out the Corporation Tax due. The accounts often provide the starting point for the tax return, because the profit figure and adjustments such as depreciation and disallowable expenses feed into the computation, but the two documents serve different purposes and go to different bodies. Preparing one does not automatically deal with the other, so it is important both are covered.

As a starting point we need your bookkeeping or accounting records for the period, along with bank statements and reconciliations for all company accounts, and the closing balances on any loans, hire purchase agreements or credit arrangements. Details of fixed assets and any additions or disposals during the year, together with stock or work in progress figures where relevant, help make sure the balance sheet is complete. Information about directors' loans, wages and dividends, plus any amounts owed to or by the company at the year end, is also important. If you are unsure what applies to your business, send what you have and we can tell you what else is needed to complete a proper set of FRS 105 accounts.

A newly incorporated company can potentially use FRS 105 if it qualifies for the micro-entities regime in its first accounting period and chooses to apply it. In practice the size conditions — turnover, balance sheet total and employee numbers — are usually comfortably met by a company that has just started trading, but first-year companies still need to be checked against the wider eligibility rules and any exclusions that might apply. A first set of accounts also sets the tone for what follows, so it is worth thinking about whether FRS 105 remains appropriate as the business grows. If the company expands beyond the size conditions for the micro-entities regime, a move to another framework may eventually be needed.