FRS 105 Micro Entity Accounts in Ilchester

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how qualifying micro-entities should prepare their annual financial statements, and it is deliberately lighter than the frameworks used by larger companies — typically fewer note disclosures and a more simplified approach to measurement. It sits alongside the legal rules of the micro-entities regime rather than replacing them, which means a company needs both to qualify for the regime and to have chosen to apply it before FRS 105 becomes relevant.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and then choose to apply it. Qualification depends on meeting the relevant size conditions and on not falling within any of the exclusions that apply to the regime. Certain company types and circumstances are excluded regardless of size, so it is not simply a question of how big the business is. It is also worth remembering that qualifying does not force you to use FRS 105 — it is an available regime, and a company that qualifies may still be able to prepare accounts under a different framework if that suits it better.

No. The micro-entities regime is an option, not an obligation. A company that qualifies for it can choose to apply the regime — and if it does, FRS 105 is the standard that applies — but qualifying companies are generally able to use a fuller framework instead if that is more appropriate for their circumstances. The choice often comes down to what the directors and any other users of the accounts need, and it is worth reviewing rather than assuming the same answer applies year after year.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the 3 applicable size conditions. Those 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 during the period. Meeting those size conditions is a starting point rather than the whole test, because the micro-entities rules also include other requirements and a number of exclusions. In practice, that means eligibility should be assessed on the specific facts of the company and the period in question.

Both are UK financial reporting standards, but they are aimed at different sizes and needs. FRS 105 is the micro-entities standard and is built around a much lower level of disclosure, reflecting the scale of the businesses it is designed for. FRS 102 is the standard generally used by larger small and medium-sized companies, and it requires more extensive disclosures and a broader set of accounting treatments. A company that qualifies as a micro-entity may still prefer FRS 102 in some situations, for example where more detailed information is wanted by lenders, investors or group companies, and that is a decision worth discussing rather than defaulting.

Where a company is required to file annual accounts, those accounts — prepared under whichever framework it uses, including FRS 105 — are submitted to Companies House in the required form. Filing obligations depend on the company's circumstances and any applicable exemptions. It is important to keep this separate from tax: filing accounts with Companies House is not the same activity as submitting a Corporation Tax Return, and the two run on their own processes and requirements.

Yes, they are separate. FRS 105 Micro Entity Accounts are the company's financial statements, prepared under the micro-entities regime and used for reporting to members and, where required, to Companies House. A CT600 is a Corporation Tax Return submitted to HMRC to report the company's taxable profits and work out the tax due. The figures in the accounts often inform the tax computation, but the accounts themselves do not satisfy the Corporation Tax filing obligation, and submitting a CT600 does not discharge the accounts filing obligation either.

In most cases we need a complete record of the period's transactions — bank statements and reconciliations, sales and purchase records, expense receipts and invoices — along with details of any assets and liabilities, stock or work in progress, loans to or from directors, and payroll information where the company employs people. Existing accounting records, prior year accounts and any relevant correspondence also help. The clearer and more complete the information provided, the more straightforward the preparation tends to be, and the easier it is to answer queries as they arise.

A newly incorporated company can potentially use FRS 105 for its first accounting period, but that depends on whether it qualifies for the micro-entities regime and whether the directors choose to apply it. New companies sometimes have unusual first-period figures, and the size conditions are assessed against the relevant period and rules rather than assumed. It is worth looking at eligibility as soon as the company starts trading, because the framework choice affects how the records should be kept from the outset.