FRS 105 Micro Entity Accounts in Farnborough

FRS 105 is the UK financial reporting standard for micro-entities. It sits within the UK GAAP framework and allows a qualifying company that has chosen the micro-entities regime to prepare a simplified balance sheet, a simplified profit and loss account and a much shorter set of notes than would otherwise be required. Several measurement options available under other standards are not permitted under FRS 105, including revaluation of fixed assets, fair value accounting and the recognition of deferred tax. The result is a leaner set of financial statements that still presents the company's position and performance.

FRS 105 is intended for companies that both qualify for the micro-entities regime and choose to apply it. Size is the starting point, but qualifying is not simply a matter of being small. Other eligibility rules and exclusions can apply — for example, certain types of undertaking are not eligible, and group structures or the company's history can affect the position. That is why it is worth checking your specific circumstances rather than assuming the regime is available. If your company does qualify and the regime suits it, FRS 105 is the standard that would be used.

No. The micro-entities regime is an available accounting regime, not a compulsory one. A company that meets the size conditions is not automatically required to use it, and using it does not happen by default — the regime has to be chosen. If a qualifying company chooses not to apply the micro-entities regime, it would typically report under a different UK GAAP standard, such as FRS 102, where it meets the relevant conditions. Many owner-managed companies choose the micro-entities route for its simplicity, but the decision should suit the business and its reporting needs.

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. Meeting 2 of the 3 is the usual test, but it is subject to the relevant rules and exclusions, and other eligibility considerations can apply. So the size conditions are an important part of the picture, but they are not the whole picture — we can look at your figures and circumstances to work out where you stand.

FRS 102 is the fuller UK GAAP standard used by many small and medium-sized companies, and it offers a wider range of accounting policies. FRS 105 is a separate, more streamlined standard written specifically for micro-entities. Under FRS 105, the balance sheet and profit and loss account are presented in a simpler format, the notes are heavily reduced, and accounting options such as revaluation, fair value measurement and deferred tax recognition are withdrawn. In short, FRS 105 trades flexibility for simplicity — which suits many micro-entities, but is not the right answer for every company.

Statutory accounts for a limited company are generally filed with Companies House, and micro-entity accounts prepared under FRS 105 can be filed there. What is filed at Companies House may not be identical to the full accounts prepared for the company's members, because the micro-entities regime allows a simplified filing. Filing accounts at Companies House is a separate process from dealing with HMRC. Companies House filing requirements for small and micro-entity accounts are also changing over time, including a move towards filing through software and the removal of some simplified filing options, so it is worth checking the current position before you file.

Yes — they are two different things. FRS 105 Micro Entity Accounts are the company's statutory financial statements, prepared under the micro-entities regime. A CT600 is a Corporation Tax Return submitted to HMRC to report the company's taxable profit and calculate the tax due. The tax return usually starts from the figures in the accounts, but then applies tax-specific adjustments, such as disallowable expenditure and capital allowances, which do not appear in the accounts themselves. Preparing the accounts and preparing the CT600 are therefore separate pieces of work, even though they share the same underlying records.

The more complete your records, the smoother the process. Typically we would ask for bookkeeping or accounting records covering the period, bank and credit card statements, sales and purchase invoices, payroll information including the number of employees, details of any loans or director's loan movements, records of assets bought or sold, and any stock or work-in-progress details. Previous accounts can also help with comparatives and consistency. If your records are incomplete or partly held in spreadsheets, that is not a barrier — tell us what you have, and we can explain what else may be needed to pull the accounts together.