FRS 105 Micro Entity Accounts in Gorseinon

FRS 105 is the UK financial reporting standard for micro-entities. It sets out the rules a qualifying company follows when measuring and presenting the figures in its annual accounts, and it is intentionally the simplest of the UK accounting frameworks. It relies on historical cost, allows very little in the way of revaluation or fair value adjustments, and requires far fewer disclosure notes than standards such as FRS 102. FRS 105 Micro Entity Accounts are therefore shorter and more straightforward than accounts prepared under other frameworks.

FRS 105 is available to companies that qualify for the UK micro-entities regime and decide to apply it. Qualification is based primarily on size, but other rules and exclusions also apply, so meeting the size conditions does not on its own guarantee that a company can use the regime. For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 applicable 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. Where a company qualifies and chooses the regime, FRS 105 is the framework used for its financial statements.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies may choose it and prepare FRS 105 Micro Entity Accounts, but it may also choose to prepare accounts under a small-entity framework such as FRS 102 Section 1A instead. The decision often comes down to what the directors and any users of the accounts need. If a lender or investor wants more detailed information, a fuller framework may be preferable; if simplicity and reduced disclosure are the priority, FRS 105 is usually the natural fit.

For accounting periods beginning on or after 6 April 2025, the size conditions are 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. A company generally needs to meet at least 2 of these 3 conditions. There are also additional rules and exclusions, and eligibility is normally considered alongside the position in the preceding financial year, which means a change in the company's size may not take effect immediately. Because the detailed tests can catch people out, it is worth reviewing your specific figures rather than assuming you qualify.

Both are UK financial reporting standards, but they serve different audiences. FRS 105 is only for companies applying the micro-entities regime, and it strips measurement and disclosure back to the essentials on a historical cost basis. FRS 102 is used by a much wider range of entities, including small companies under Section 1A, and it offers more accounting options, such as revaluation and certain fair value measurements, along with a longer set of disclosure notes. FRS 105 Micro Entity Accounts are quicker and cheaper to prepare, while FRS 102 accounts generally give readers a more detailed view of the business.

Yes, a company's annual accounts are filed with Companies House, and where the micro-entities regime has been applied, those accounts are prepared under FRS 105. A Corporation Tax Return, known as a CT600, is a separate document submitted to HMRC. The two are not interchangeable: the accounts cover financial reporting, while the CT600 deals with Corporation Tax and may include tax adjustments that do not appear in the accounts at all. Preparing and filing your FRS 105 Micro Entity Accounts does not settle your Corporation Tax position, and filing a CT600 does not replace your accounts filing.

It may be able to, provided it qualifies as a micro-entity and the regime is available to it. A new company has no preceding financial year to compare against, so the position for a first set of accounts is assessed differently from a company that has been trading for years. In practice, many newly incorporated small companies find that FRS 105 Micro Entity Accounts suit them well in the early years because the reporting is simpler. It is still worth checking the rules and exclusions for your circumstances before adopting the regime.

Good records make the whole process smoother. Typically we would ask for your bank statements and reconciliations, sales and purchase records, payroll information, details of any equipment or other assets bought or sold, stock or work-in-progress figures where relevant, loan and hire purchase agreements, and the previous year's accounts if there are any. Confirmation of your company details and share capital is also useful, along with anything unusual that happened during the period. Once we can see the full picture for the year, we can prepare the accounts and explain what has been included and why.