FRS 105 Micro Entity Accounts in Morpeth, Prepared for Qualifying Companies

FRS 105 is the UK financial reporting standard for micro-entities. It is a simplified accounting framework: the balance sheet format is shorter, far fewer notes are required, and the profit and loss account can be presented in a very condensed form. It exists so that the smallest qualifying companies can report their financial position without the level of detail demanded by the larger-company standards. It is an accounting standard, not a tax return, and it applies when a qualifying company has chosen to use the micro-entities regime.

FRS 105 is available to companies that qualify for the micro-entities regime and decide to apply it. There are two parts to that: qualifying on size and not being caught by any of the exclusions that apply to the regime, and then choosing the regime over the alternative of reporting under FRS 102. A company that qualifies is not obliged to use FRS 105, and a company that does not qualify cannot use it simply because it is small in practical terms. Because the rules and exclusions are detailed, it is worth checking your specific position rather than assuming.

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. Those three conditions sit alongside the other rules and exclusions that govern the regime, which is why meeting the size tests on their own does not automatically confirm eligibility. If you are near a threshold, the position for your particular accounting period is worth reviewing carefully.

No. The micro-entities regime is an available accounting regime that a qualifying company may choose, and FRS 105 is the standard that applies when that choice is made. A company that qualifies can instead prepare its accounts under FRS 102, which is a fuller framework with more disclosure requirements. Some businesses prefer that approach because of the way they present their results, because of arrangements such as revaluations, or simply for comparability with previous years. The decision should be made deliberately for each accounting period.

FRS 102 is the general UK standard for companies that are not applying the micro-entities regime, and it is more detailed. Under FRS 105, the financial statements are shorter and the note disclosures are greatly reduced; certain measurement options available under FRS 102 are not permitted, and some items are treated differently — for example, deferred tax is not recognised under FRS 105. In practice, using FRS 105 means less preparation and less disclosure, but also less flexibility in how figures are presented. The right framework depends on the company's size, its transactions and what the directors want from the accounts.

Yes — micro-entity accounts are statutory accounts, and limited companies generally file them at Companies House. Filing the accounts is a separate obligation from your Corporation Tax Return (CT600), which is submitted to HMRC, and from your Confirmation Statement, which is a Companies House filing that confirms your company's details rather than reporting your financial results. In practice you may be dealing with more than one filing in the same period, each on its own basis, so it helps to plan them together.

It is. The FRS 105 Micro Entity Accounts are the company's statutory financial statements, prepared under the accounting framework, and they are used for Companies House filing. The CT600 is the Corporation Tax Return submitted to HMRC and is prepared under tax rules, which are not identical to the accounting treatment in the accounts. Figures can differ because of disallowable expenses, capital allowances and other adjustments. Both need to be dealt with, but they are separate pieces of work with separate purposes.

A newly incorporated company may well be in a position to use the micro-entities regime, particularly in its first period when activity is often limited. However, eligibility is not decided by how young the company is — it depends on the size conditions and the exclusions that apply, considered in relation to the accounting period. A newly formed company that is part of a larger group, for instance, may find the position is not as straightforward as it first appears. It is worth confirming before the accounts are prepared.

We generally need your complete accounting records for the period: sales and purchase records, bank and cashbook information, details of any loans or hire purchase agreements, payroll information, and evidence for significant asset purchases or disposals. Details of stock or work in progress, any amounts owed to or by the company, and any unusual transactions in the year are also helpful. If you already use bookkeeping software, giving us access is usually the quickest route. The more complete the records, the more efficiently the accounts can be prepared.