FRS 105 Micro Entity Accounts in Liskeard

FRS 105 is the UK accounting standard that sets out the recognition, measurement and disclosure requirements for companies applying the micro-entities regime. In practice it produces a short set of financial statements: a balance sheet, a small number of notes and, where included, a profit and loss account. The standard is deliberately streamlined, so the accounts focus on the information that micro-entity shareholders and other readers are most likely to need. It is the reporting framework that applies when a qualifying company chooses the micro-entities regime — it is not a tax return, and it is not the same thing as a Confirmation Statement.

No. The micro-entities regime is an available regime, not a mandatory one. A company that qualifies for it can choose to apply it, and FRS 105 applies when that choice is made. A qualifying company may instead report under a fuller framework such as FRS 102, which requires more disclosure and offers more accounting options. The decision often comes down to the needs of the people who read the accounts — a bank, an investor or a group company may want more detail than micro-entity accounts provide — so it is worth weighing the options rather than assuming simplification is always best.

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. There are additional rules and exclusions that can affect the outcome. Certain companies are excluded regardless of size — for example, companies with securities admitted to trading on a regulated market and certain financial or investment undertakings — and specific rules apply to groups, to how the conditions are measured and to first accounting periods. Meeting the size conditions therefore does not, on its own, guarantee that a company qualifies for the micro-entities regime.

FRS 102 is the fuller UK standard used by small and medium-sized companies that are not applying the micro-entities regime. It requires considerably more disclosure, permits more accounting policy choices — including revaluation and fair value measurement in certain circumstances — and generally results in longer, more detailed accounts. FRS 105 is narrower: it is based on historical cost, offers very limited policy choices and requires far fewer notes. Neither is automatically better; the appropriate framework depends on the regime your company qualifies for and chooses, and on what readers of the accounts genuinely need to see.

Yes, in the ordinary course. The financial statements a company prepares for its members are also the ones it delivers to Companies House, subject to the filing options, exemptions and deadlines that apply to that company. It is worth separating this from tax: the accounts go to Companies House as a public record, while the Corporation Tax Return goes to HMRC, and the two submissions follow different routes even though they draw on the same underlying figures. Companies House filing requirements do change from time to time, including how accounts must be submitted and what information smaller companies are expected to provide, so it is better to check the current position for your own accounting period than to rely on what applied a few years ago.

Yes, they are separate documents with different audiences. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime; the CT600 is the Corporation Tax Return submitted to HMRC. The tax computation behind the return often starts from the profit shown in the accounts, but adjustments — for example for disallowable expenditure, capital allowances or losses brought forward — mean the taxable amount can differ from the accounting profit. Treating them as linked but distinct pieces of work helps avoid confusion about what has been filed and what still needs to be done.

A new company can use FRS 105 if it qualifies as a micro-entity and chooses to apply the micro-entities regime. First-period rules deserve particular attention, because whether a company is treated as a micro-entity in its first accounting period, and whether the regime can be applied to that period, depends on the rules in force and on the company's own circumstances, including any group relationships. Many small companies starting out sit comfortably within the size conditions from day one, but that should be confirmed rather than assumed before accounts are prepared on that basis.

A complete set of records for the period is the starting point: bookkeeping or accounting software data, bank and credit card statements, sales and purchase invoices or summaries, payroll and pension information, details of assets bought or sold, stock or work in progress, loans and finance agreements, and movements on directors' loan accounts. It also helps to know who owns the company, whether there are any group or connected company relationships, and whether anyone outside the company relies on the accounts, such as a lender. The more complete and consistent the information, the more straightforward preparation tends to be, and the fewer queries are likely to arise along the way.