FRS 105 Micro Entity Accounts in Lees — Prepared for Qualifying Micro-Entities

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how a qualifying company prepares its annual accounts when it applies the micro-entities regime, and it is deliberately simpler than the frameworks used by larger companies. FRS 105 accounts are prepared on a historical cost basis, with a short balance sheet, a profit and loss account and a limited set of notes. Because the disclosures are reduced, the accounts are usually faster and less expensive to prepare — but they still have to reflect the company's transactions accurately and be filed in the required form.

FRS 105 is for companies that qualify for the UK micro-entities regime and then choose to apply it. For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 size conditions, subject to the applicable rules and exclusions: 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 test — other eligibility rules and exclusions can apply, and some companies are excluded from the regime altogether. Qualifying is not the same as having to use it.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies as a micro-entity can choose to apply it, or it can choose a different framework instead. Many qualifying companies select FRS 105 because the reduced disclosures make the accounts quicker and cheaper to prepare, while others prefer a fuller framework because of the additional information it provides to lenders, investors or other users of the accounts. The key point is that eligibility opens the option; the choice is a decision for the company.

Both are UK financial reporting standards, but they suit different situations. FRS 105 is the micro-entities framework and applies only where a company qualifies for the regime and chooses to use it, with simplified measurement and far fewer disclosure notes. FRS 102 is the broader standard, and small companies often use FRS 102 Section 1A, which allows more accounting options such as revaluation and a greater level of disclosure. In practice, FRS 105 means shorter, simpler accounts; FRS 102 means more detail and more preparation work. Which is appropriate depends on your company's circumstances and who relies on the accounts.

Where a company is required to file annual accounts at Companies House, its FRS 105 Micro Entity Accounts form part of that filing, and the accounts must be prepared in the format and with the content the framework requires. The filing itself is a separate administrative step from preparing the accounts, and the deadline that applies to your company should always be checked against your own accounting reference date rather than assumed. Filing accounts is also distinct from filing a Confirmation Statement, which is a separate requirement. If you are unsure what your company needs to send, and when, ask before the deadline rather than after it.

Yes, they are different documents with different purposes. FRS 105 accounts are the statutory financial statements prepared under the micro-entities regime, and they are used for Companies House purposes. A CT600 is a Corporation Tax Return submitted to HMRC to report the company's taxable profits and calculate the tax due, and it is generally supported by computations that start from the figures in your accounts but are not the same thing as the accounts. Preparing one does not automatically complete the other, so both should be planned for separately.

A newly incorporated company can potentially qualify for the micro-entities regime in its first accounting period, but eligibility still has to be assessed against the size conditions and any exclusions that apply — it is not an automatic right simply because the company is new or small. In a first period, there may be no comparative figures and the period itself may be longer or shorter than a year, which can affect how the tests are applied. It is worth discussing the framework with us early, ideally before the year end, so your record-keeping is set up to support the accounts you intend to prepare.

We normally need the company's bookkeeping or accounting records for the period, bank statements and reconciliations, sales and purchase information, details of any fixed assets acquired or disposed of, stock or work in progress where relevant, loan and lease agreements, payroll and director-related information, and any previous year's accounts. It also helps to know your accounting reference date and whether the micro-entities regime has been applied before, as this affects comparatives. If your records are incomplete, we can talk through what is missing and how best to fill the gaps, so the accounts can be prepared from a reliable starting point.