FRS 105 Micro Entity Accounts in Monkseaton

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how a micro-entity recognises and measures the items in its financial statements and what it needs to disclose. Its rules are intentionally simplified compared with the standards used by larger companies — for example, there is far less disclosure and a narrower set of accounting options — which makes it one of the least administratively demanding ways for a small company to produce statutory accounts.

FRS 105 is available to companies that qualify for the micro-entities regime and choose to apply it. Qualification depends on meeting the applicable size conditions and not falling within any of the relevant exclusions. For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 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 alone does not automatically guarantee eligibility, because other rules and exclusions can apply, so it is worth checking your specific position.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies can choose to apply it — and FRS 105 applies when that choice is made — or it can apply a different framework instead, such as FRS 102 Section 1A. Some directors prefer FRS 105 for its simplicity and reduced disclosure, while others prefer a fuller framework because it offers accounting policy options that FRS 105 does not permit. The right answer depends on your company, its transactions and what you need from the accounts.

FRS 102 is a broader financial reporting standard, and Section 1A of it is the version designed for small companies. FRS 105 is a separate, more streamlined standard for micro-entities. In practice, FRS 105 permits fewer measurement choices — for instance, it does not allow revaluation of assets or the fair value accounting options that FRS 102 provides — and it requires considerably less disclosure. FRS 102 Section 1A gives you more flexibility and more detailed notes, which some businesses need or prefer. Choosing between them is a decision based on eligibility and on what best suits your company's circumstances.

For most companies, statutory accounts do need to be filed at Companies House, and that includes accounts prepared under FRS 105 for a company that qualifies and applies the micro-entities regime. The filing requirement and the form the accounts take depend on your company's situation, so it is worth confirming what applies to you rather than assuming. Filing accounts at Companies House is separate from your Corporation Tax obligations, even though the figures in both are usually consistent with each other.

Yes, they are two distinct requirements. FRS 105 concerns the accounting and financial reporting framework used to prepare your financial statements, which are then filed at Companies House where required. A CT600 is a Corporation Tax Return submitted to HMRC, and it deals with your company's tax position rather than its statutory accounts. The two are closely related because they draw on the same underlying financial information, but preparing FRS 105 Micro Entity Accounts and completing a CT600 are separate tasks with separate deadlines and separate recipients. It is important not to treat one as covering the other.

A newly incorporated company can potentially use FRS 105, but eligibility is not granted simply because the company is new or small. Qualification depends on meeting the applicable size conditions and not falling within any relevant exclusion, which is assessed against the rules in force for the accounting period in question. A company in its first period of trading may have straightforward figures, but it is still worth checking the position properly before deciding which framework to adopt, because the choice affects how the accounts are presented from the outset.

In most cases we would look for your bookkeeping or accounting records for the period, bank and credit card statements, sales and purchase information, payroll details if you employ staff, records of any assets owned by the company, details of loans or director's loan movements, and a copy of the previous year's accounts if there is one. If your records are incomplete, tell us — we can discuss what needs to be pulled together before the accounts are prepared. The more complete and accurate the underlying information, the more reliable the resulting financial statements will be.

There are planned changes to how accounts are filed at Companies House, including a move towards digital, software-based filing and a greater emphasis on the information small and micro-entities report, such as profit and loss detail alongside the balance sheet. Because the detail and timing of these changes depend on the rules as they are brought into effect, it is sensible to review your position rather than assume your current approach will remain unchanged. We can discuss what the direction of travel means for your FRS 105 Micro Entity Accounts and how best to prepare for it.