FRS 105 Micro Entity Accounts in Knowle

FRS 105 is the UK financial reporting standard that applies to the micro-entities regime. It sets out how a qualifying company prepares its annual financial statements when it has chosen to use that regime. The standard is intentionally simplified: it is built around a historical cost approach, keeps disclosure to a minimum and produces a shorter set of accounts than the frameworks used by larger companies, while still delivering a proper balance sheet, notes and the other required elements.

FRS 105 is available to companies that qualify for the UK micro-entities regime and then choose to apply it. Two things have to line up: the company must meet the eligibility rules for the regime, and the directors must decide to adopt it. Meeting a size test alone does not automatically settle the question, because other eligibility rules and exclusions can apply, and certain company types are not able to use the regime at all. We look at your company's specific position before recommending a framework.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies can choose to apply it and use FRS 105, or it can instead prepare its accounts under a fuller framework such as FRS 102 Section 1A, which is designed for small entities. There may be reasons to prefer one over the other — for example, the level of detail a lender, investor or parent company expects to see. Once a framework is chosen, it should be applied consistently and the choice reflected properly in the accounts.

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: 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. These are the headline size conditions rather than the whole story — the relevant rules and exclusions also apply, and some companies are prevented from using the regime regardless of their size. Because the detail matters, eligibility should be checked against your company's actual figures and circumstances.

Both are UK financial reporting standards, but they are aimed at different sizes of company and produce different levels of detail. FRS 105 is the streamlined standard for the micro-entities regime: fewer disclosures, a simpler measurement approach and no fair value or revaluation work in the accounts. FRS 102 Section 1A is the small entities framework, which allows more recognition and measurement options and requires more disclosure. In practice, choosing between them is a question of eligibility, what the accounts are used for, and how much detail the company wants or needs to publish.

Where a company has a statutory accounts filing obligation, the accounts it prepares — including accounts prepared under FRS 105 — form the basis of what is filed at Companies House. The filing itself is a separate administrative step from the preparation work, and it is also separate from anything submitted to HMRC. We can prepare the FRS 105 financial statements and handle the Companies House filing as part of the same engagement, so the figures that go on the public record are consistent with the accounts we have prepared.

Yes, they are two different things. FRS 105 Micro Entity Accounts are the company's statutory financial statements, prepared under the accounting framework that applies to the micro-entities regime and filed at Companies House where required. A CT600 is a Corporation Tax Return submitted to HMRC, dealing with the company's tax position for the period. The figures in the accounts usually inform the tax return, and adjustments are often needed to move from accounting profit to taxable profit, but the two documents serve different purposes and go to different recipients.

It can, in principle, where it qualifies for the micro-entities regime and the directors choose to apply it — but it is not automatic, and a newly incorporated company still needs to satisfy the eligibility rules and any relevant exclusions. A first set of accounts can also raise practical points, such as the length of the accounting period, the treatment of pre-trading costs and how the first year's figures will be presented. If you are setting up or have recently set up a company in Knowle, it is worth discussing the framework early so your records are kept in a way that supports the accounts you intend to prepare.

We generally need your financial records for the period: bank and credit card statements, sales and purchase information, payroll details, records of asset purchases and disposals, loan and finance agreements, and any stock, work in progress or debtor and creditor balances. If the company has traded before, the previous year's accounts and working papers help us keep comparatives and accounting policies consistent. The more complete and well-organised the records are, the more straightforward the preparation tends to be — and if your bookkeeping is not up to date, we can talk through how best to bring it together.

There has been an ongoing move towards filing accounts at Companies House through software rather than manually, and changes have been signalled that would affect how small and micro-entity accounts are submitted, including more information being filed. Because these changes are introduced through legislation and are phased in over time, the practical impact depends on your company's period end and its circumstances. We keep the filing process under review and will explain what applies to your company when we prepare your FRS 105 Micro Entity Accounts, rather than relying on assumptions.