FRS 105 Micro Entity Accounts in Cranbrook: Simplified Financial Reporting for Qualifying Micro-Entities

FRS 105 is the UK financial reporting standard for micro-entities. It sets out the rules for preparing FRS 105 Micro Entity Accounts, including how assets, liabilities, income and expenses are recognised and measured, and what must be disclosed in the financial statements. It is designed to be simpler than the standards used by larger companies, with fewer disclosures and less complexity in areas such as revaluations and fair value accounting. FRS 105 only applies where a company qualifies for the micro-entities regime and has chosen to apply it.

FRS 105 is available to companies that qualify for the UK micro-entities regime and choose to apply it. For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 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. The size conditions are not the whole story — other eligibility rules and exclusions can apply — so meeting the thresholds alone does not automatically mean FRS 105 is available to your company.

No. The micro-entities regime is an option, not an obligation. A company that qualifies may choose to apply FRS 105, or it may instead prepare its accounts under another framework such as FRS 102. Once you have decided which regime to use, you need to apply it consistently and make sure your accounting policies and disclosures match that choice. If you are unsure which framework suits your company, it is worth reviewing the options before the accounts are prepared rather than afterwards.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 applicable size conditions to be a micro-entity: turnover of no more than £1 million, a balance sheet total of no more than £500,000, and an average number of employees of no more than 10. Qualifying is only the first step — the company then chooses whether to apply the micro-entities regime. Certain entities are excluded regardless of size, and the rules can work differently for companies in unusual circumstances, so eligibility should be checked before the accounts are prepared.

FRS 105 is the lighter, more streamlined framework for qualifying micro-entities, while FRS 102 is the standard used by most other companies, often in its Section 1A form for small entities. FRS 105 allows fewer accounting options and requires fewer disclosures — for example, revaluations and fair value accounting are not permitted and deferred tax is not recognised. FRS 102 offers more flexibility and more detailed disclosure, which can be helpful for companies with more complex transactions or those who need to present a fuller picture to lenders or investors.

Yes. Statutory accounts, including FRS 105 Micro Entity Accounts, generally need to be filed with Companies House. A confirmation statement is a separate filing and does not replace the accounts, and filing the accounts is also separate from dealing with Corporation Tax. Micro-entity accounts are prepared for the company's members as well as for the public record, and the figures used for tax purposes may differ from those in the accounts. Filing requirements for small and micro-entity accounts have been changing, so it is worth checking the current position for your company before you file.

Yes, they are separate. FRS 105 Micro Entity Accounts are the company's statutory financial statements, prepared under company law and the applicable accounting standard. A CT600 is the Corporation Tax Return submitted to HMRC, and it is based on the company's taxable profits rather than simply the profit shown in the accounts. Adjustments such as disallowable expenses and capital allowances can create differences between the two, so the accounts and the tax return are usually prepared side by side but serve different purposes and go to different organisations.

Broadly, we need a complete and accurate record of the company's transactions for the period: sales and purchase records, bank and credit card statements, payroll information, details of stock and work in progress, asset purchases and disposals, loans and other financing, and any relevant agreements. It also helps to know the accounting policies the company has adopted and whether any one-off events have affected the figures. Good records make the process smoother and reduce the risk of queries, so keeping your bookkeeping up to date throughout the year is well worth the effort.