FRS 105 Micro Entity Accounts in Fetcham

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how a qualifying micro-entity prepares its annual accounts when it applies the micro-entities regime. In practice it allows for a simplified balance sheet, a simplified profit and loss account and far fewer notes than a fuller framework, and it restricts certain measurement options such as revaluation and fair value accounting. The standard exists so that genuinely small companies can report their financial position in a proportionate way without the level of disclosure required of larger businesses.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and choose to apply it. Qualifying is not simply a matter of feeling small — the company must meet the applicable size conditions, and there are also rules and exclusions that can prevent a company from using the regime even where the size tests appear to be met. Certain entity types and certain regulated or group situations are restricted. Because both the size tests and the exclusions matter, it is worth checking your position carefully before deciding that FRS 105 applies.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies may choose to apply it, and FRS 105 applies when that choice is made. A qualifying company can instead report under a fuller framework such as FRS 102, which some businesses prefer because it provides more disclosure or because it aligns more closely with the information lenders, investors or group companies want to see. The decision is a commercial and reporting one as much as a technical one.

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 the size conditions is not the whole story — other rules and exclusions can apply, and in some cases a company that has previously been larger may need to look at the position across consecutive periods. The conditions are the starting point for assessment, not a guarantee that the micro-entities regime is available.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 105 is the micro-entities standard and is deliberately narrow: simplified statements, very limited disclosure, and restricted measurement options. FRS 102 is the standard used by a much wider range of companies and provides more detailed recognition, measurement and disclosure requirements, including areas such as deferred tax and certain financial instruments that FRS 105 does not address in the same way. FRS 105 is generally simpler and shorter; FRS 102 generally gives a fuller picture and is often expected where third parties want more detail.

Yes — a company that prepares annual accounts under FRS 105 still has to file those accounts with Companies House, and the accounts must meet the filing requirements that apply to micro-entity accounts, including the correct format and the required statements and signatures. Filing the accounts is a separate step from preparing them, and it is also separate from your Corporation Tax position. It is worth noting that the way accounts are filed with Companies House is changing over time, with greater emphasis on filing in a structured electronic format, so it is sensible to keep your filing arrangements under review.

Yes, they are two different things. FRS 105 Micro Entity Accounts are your statutory financial statements — the accounting and financial reporting framework for qualifying micro-entities. A Corporation Tax Return, often referred to as a CT600, is a separate filing submitted to HMRC that reports the company's taxable profits and calculates the corporation tax due. The accounts usually inform the tax return, because the starting point for taxable profit is normally the profit shown in the accounts, but preparing and filing one does not automatically deal with the other. Both obligations need to be handled.

As a starting point we would normally need your accounting records for the period — bookkeeping or management accounts, bank statements, sales and purchase records, payroll information if you employ staff, details of any assets bought or sold, loan and director's loan account movements, and your previous year's accounts for comparison. It also helps to know your company's structure, its accounting reference date and whether anything unusual happened during the year, such as a change in shareholding or a significant one-off transaction. The more complete the records, the more straightforward the preparation process tends to be, and any gaps can usually be worked through together.