FRS 105 Micro Entity Accounts in Margate

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how a qualifying company that has chosen to apply the micro-entities regime prepares its annual financial statements. Compared with fuller frameworks, it allows a shorter balance sheet, a shorter profit and loss account and far fewer notes, and it avoids much of the fair value and revaluation complexity found elsewhere. It is a reporting framework, not a tax regime — it governs how the accounts are put together, not how much tax is payable.

FRS 105 is for companies that qualify for the UK micro-entities regime and then choose to apply it. Qualifying is a two-part test: the company must fall within the size limits, and it must not be excluded by the other eligibility rules that apply to the regime. If a company qualifies but prefers a fuller framework such as FRS 102, it can generally choose that instead. Larger companies, and those caught by the exclusions, cannot use FRS 105.

No. FRS 105 applies when a company both qualifies for the micro-entities regime and decides to use it. Qualifying companies may instead prepare accounts under a fuller framework. The right choice depends on what the accounts are used for — a business with lenders, investors or group reporting requirements may find a fuller framework more useful, while a simple owner-managed company may prefer the shorter FRS 105 format.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 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. Meeting those size conditions is necessary but not sufficient — other rules and exclusions can apply, and thresholds can change, so eligibility should be confirmed against your company's specific circumstances and the rules in force for the period.

FRS 102 is the standard applied by a much wider range of UK companies and it requires more disclosure and more detailed measurement, including areas such as fair value and financial instruments. FRS 105 is deliberately lighter, with a condensed balance sheet, condensed profit and loss account and minimal notes, and it is restricted to qualifying micro-entities that choose it. In practice, FRS 102 accounts give readers more information; FRS 105 accounts give a shorter, simpler set of FRS 105 financial statements.

Yes — accounts prepared under the micro-entities regime still have to be delivered to Companies House, and the filing must follow the format and content requirements that apply to micro-entity accounts. Filing the accounts is a separate step from preparing them, and it is also separate from Corporation Tax. Preparing FRS 105 Micro Entity Accounts, filing them at Companies House and submitting a CT600 to HMRC are three distinct tasks, even where they draw on the same underlying figures.

Yes, they are separate. FRS 105 accounts are the company's financial statements, prepared under the micro-entities reporting framework and used for the Companies House filing. A CT600 is a Corporation Tax Return submitted to HMRC, and it works to tax rules rather than accounting rules — for example, disallowable expenses and capital allowances are dealt with in the tax computation, not in the accounts themselves. The accounts usually form the starting point for the CT600, but one does not substitute for the other.

A newly incorporated company can potentially use FRS 105 in its first accounting period if it meets the eligibility conditions and chooses the micro-entities regime. New companies often have low turnover and few employees, so the size conditions may well be met, but that is not automatic — the exclusions still need to be checked and the position can change as the business grows. It is worth confirming the basis of preparation early so your first set of accounts is put together correctly from the start.

Typically you would provide bank statements and reconciliations for the full period, sales and purchase records, payroll and subcontractor information, details of any assets bought or sold, loan and director's loan account movements, stock or work-in-progress figures where relevant, and any previous year's accounts. If you use bookkeeping software, giving access or an export is usually quicker than sending documents individually. The more complete the records, the more straightforward the preparation — and if something is missing, we will tell you what we need.

Company filing requirements and the way accounts are submitted have been evolving, including a move towards digital, software-based filing formats and updated filing rules. Because the detail and timing of these changes sit with the relevant authorities rather than with us, it is worth checking the current position for your own filing period before you submit. When we prepare FRS 105 Micro Entity Accounts for a Margate company, we work with the rules and formats in force at the time and explain what your filing will involve.