FRS 105 Micro Entity Accounts in Donington

FRS 105 is the UK financial reporting standard for companies that qualify as micro-entities and choose to apply the micro-entities regime. It sits alongside the more detailed FRS 102, which most other UK companies use. FRS 105 takes a simpler approach to recognition, measurement and disclosure, so the resulting financial statements are shorter and less complex. The trade-off is that some accounting treatments permitted or required under FRS 102 are not available, which can lead to different figures — so the choice of framework can affect what your accounts actually say about your business, not just how long the document is.

FRS 105 is intended for companies that qualify for the micro-entities regime under UK company law and then choose to apply it. Qualification is based on size conditions together with other rules and exclusions, so meeting the size tests alone does not automatically mean a company is eligible or that it should use this framework. Some companies are outside the regime for other reasons. If you are unsure where you stand, it is worth reviewing your specific position rather than assuming, because the framework you use shapes your reported figures and your disclosures.

No. The micro-entities regime is an available regime for qualifying companies, not a mandatory one. A company that qualifies can generally choose FRS 105, or it can opt for a fuller framework such as FRS 102 if that better suits its circumstances. In practice, some directors prefer the greater level of disclosure in FRS 102 because banks, investors or prospective purchasers may expect it. Others value the simplicity of FRS 105. It is a genuine decision, and it is worth making it deliberately rather than by default.

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 during the period. Other eligibility rules and exclusions also apply, and the test is not simply a matter of falling under the thresholds. Because the criteria have been updated in recent years, older guidance you may find online can be out of date, so it is worth checking your position against the current rules.

Both are UK accounting standards, but they are aimed at different sizes of company. FRS 102 is the general standard and covers a broad range of accounting treatments and disclosures. FRS 105 is a reduced framework for qualifying micro-entities, with simpler measurement rules and far fewer disclosure notes. The practical consequence is that certain items treated one way under FRS 102 — for instance, revaluations of property or fair value adjustments on financial instruments — are handled differently under FRS 105. That means switching between the two can change reported profit and net assets, so it is not a purely presentational choice, and consistency from year to year matters.

Preparing FRS 105 Micro Entity Accounts and filing them with Companies House are two separate steps, although they are closely linked. A company that is required to file accounts must normally do so, and the accounts filed are the ones prepared under the chosen framework. The format filed can differ from the full accounts prepared for the members, because a filleted or abridged version may be permitted for the public record. Filing requirements vary with company type and circumstances, so it is worth confirming what applies to your company rather than assuming the position is the same for everyone.

Yes, they are distinct. Your FRS 105 accounts are the financial statements prepared under that framework. The CT600 is a Corporation Tax Return submitted to HMRC to report your company's taxable profits and calculate the tax due. The two are prepared for different audiences and different purposes, although they should be consistent with each other — the figures in the accounts normally form the starting point for the tax computation, with adjustments applied. It is also worth remembering that a Confirmation Statement is a third, separate filing that confirms your company's registered details and does not replace either of the other two.

As a starting point, we would usually ask for your bookkeeping or accounting records for the period, bank and credit card statements, details of sales and purchases, payroll information, and records of any assets bought or sold. It also helps to have information on loans, hire purchase or lease agreements, director's loan account movements, stock or work in progress, and any amounts owed to or by the company at the period end. If the company has previously filed accounts, a copy of those is useful so we can keep the presentation consistent. If your records are incomplete or held in a mix of formats, that is not a problem in itself — just tell us what you have and we can work out what else is needed.

A newly incorporated company can potentially use FRS 105, but it still has to qualify for the micro-entities regime and decide to apply it. A company in its first period of trading will typically have limited financial history, and eligibility is assessed against the size conditions and other rules that apply to it. It is also worth thinking ahead: if you expect the business to grow, or you know a lender or investor will want detailed accounts, starting on FRS 102 and staying there may be simpler than changing frameworks later. We are happy to talk through the options when you are setting up or in your first year.