FRS 105 Micro Entity Accounts in Faringdon: Clear, Accurate Financial Reporting

FRS 105 is the UK financial reporting standard for companies that choose to apply the micro-entities regime. It sets out how the small and simple financial statements of those companies should be prepared, including what is recognised, how items are measured and what must be disclosed. It is built on a historic cost basis and carries far lighter disclosure requirements than FRS 102, which is why it produces a shorter set of accounts.

FRS 105 is available to companies that both qualify for the micro-entities regime and choose to apply it. Qualifying is not just about size — certain rules and exclusions can apply, and some companies are not eligible even if they are small. 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 conditions does not automatically guarantee eligibility, so it is worth checking your specific circumstances.

No. The micro-entities regime is an available accounting regime, not a requirement. A qualifying company can choose to apply it and prepare FRS 105 accounts, or it can prepare accounts under FRS 102 instead. There are legitimate reasons for either route, such as the level of detail you want in the accounts, the needs of lenders or other users, or how you want items such as investment properties or financial instruments to be treated. It is a decision to make deliberately rather than by default.

Both are UK financial reporting standards, but they are aimed at different sizes of company and differ in complexity. FRS 105 applies where a qualifying company chooses the micro-entities regime, and it keeps things simple: historic cost accounting, no fair value measurements, no revaluations and no deferred tax, with a very short set of notes. FRS 102 is the standard for larger entities, including small companies using the small entities regime, and it requires considerably more disclosure and allows a broader range of accounting treatments.

Limited companies normally need to file annual accounts at Companies House, and where a company has prepared accounts under the micro-entities regime, the lighter micro-entity format can generally be used for that filing. Filing the accounts is separate from your Corporation Tax position, and the accounts also need to be approved and signed appropriately by the director or directors before submission. The exact requirements depend on your company's circumstances, so it is worth confirming the position for your year.

Yes, they are two distinct things. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime in line with UK accounting standards. A CT600 is a Corporation Tax Return submitted to HMRC, which reports your company's taxable profits and calculates the tax due. The figures in your accounts are usually the starting point for the tax computation, but the tax return itself involves adjustments and disclosures that are not part of the accounts.

A newly incorporated company may be able to use FRS 105 for its first accounting period if it qualifies for the micro-entities regime and chooses to apply it, as many new companies start small. However, eligibility also depends on the applicable rules and exclusions, and a first period can cover more than twelve months, which affects how the size conditions are assessed. It is worth reviewing this before the first set of accounts is prepared rather than assuming the framework applies.

In practice you will need a clear record of the period's income and expenses, bank and credit card statements, sales and purchase invoices, payroll information, details of any loans or finance agreements, and records of assets purchased or sold during the year. Details of stock or work in progress, amounts owed to and by the company, and any director's loan movements are also helpful. The better the records, the more straightforward it is to prepare accurate FRS 105 financial statements.

Company filing requirements do change from time to time, including how accounts are submitted and the format accepted by Companies House. Because those changes can affect how micro-entity accounts are prepared and delivered, it is sensible to confirm the current position for your accounting period before you file. We can talk you through what applies to your company's year and help make sure your FRS 105 Micro Entity Accounts are put together in a way that fits the rules in force at the time.