FRS 105 Micro Entity Accounts in Redditch

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how the financial statements of a qualifying micro-entity should be prepared, including the format of the balance sheet, the recognition and measurement of items such as debtors and creditors, and the limited notes that accompany the accounts. It is designed to be simpler than the standards used by larger companies, so it involves fewer accounting options and far less disclosure.

FRS 105 is available to companies that qualify for the UK micro-entities regime and choose to apply it. Qualification is not automatic, and it is not decided by size alone. A company generally needs to fall within the size limits set for micro-entities and must not be caught by any of the applicable rules or exclusions that prevent certain entities from using the regime. Because more than one condition can be relevant, it is worth checking your company's own position for the specific accounting period before deciding.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the following 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 is the starting point rather than the whole picture — other eligibility rules and exclusions can also apply, and in some cases a company that satisfies the size tests may still be unable to use the regime. The micro-entities regime is an available accounting regime for qualifying companies, and FRS 105 applies when that regime is chosen.

No. The micro-entities regime is a choice available to qualifying companies rather than a mandatory framework. A company that meets the relevant conditions can decide to apply the regime and use FRS 105, or it can use a different framework such as FRS 102. The decision may depend on the company's activities, its plans, what its lenders or other stakeholders expect to see, and whether the simplified reporting under FRS 105 suits the way the business is run.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 105 is the micro-entities standard and is the more streamlined of the two: it works on a historical cost basis, offers fewer accounting policy choices, and requires considerably less disclosure. FRS 102 is used by a much wider range of entities, and the small companies variant of it allows more accounting options and asks for more information in the notes. In practice, the choice between them comes down to eligibility and what level of reporting best reflects the company's circumstances.

Yes. Where a company prepares its statutory accounts under FRS 105, those accounts are the ones submitted to Companies House for the relevant financial period. Under the current rules, the accounts filed by a micro-entity focus on the balance sheet and its notes rather than the profit and loss account, which means the publicly filed version is shorter than the full accounts prepared for the company's own records and for tax purposes. Filing the accounts at Companies House is a separate exercise from submitting a Corporation Tax Return to HMRC.

Yes, they are two distinct filings. FRS 105 Micro Entity Accounts deal with the accounting and financial reporting framework — how the financial statements are prepared and presented. A CT600 is the Corporation Tax Return submitted to HMRC, which calculates the company's tax position for the period. The figures in your accounts will normally inform the tax return, and HMRC receives a copy of the accounts alongside the return, but preparing and filing the accounts is not the same task as preparing and filing the CT600.

A newly incorporated company can use FRS 105 if it qualifies for the micro-entities regime and chooses to apply it. New companies are typically small enough to fall within the size conditions, but qualification still depends on the rules and exclusions that apply to the company and its accounting period. It is also worth noting that a first accounting period is often shorter than twelve months, and the way the size conditions are assessed can differ in that situation, so checking the position at the outset is sensible.

As a starting point, your bookkeeping records for the period, along with bank and credit card statements, sales invoices and purchase documentation, details of any loans or finance agreements, payroll information, and a list of the company's assets and what they are worth in the accounts. Previous year's accounts are helpful for opening balances and comparatives, and any correspondence about the company's structure or ownership may be relevant too. Having this information ready makes it easier to confirm eligibility and to prepare the accounts accurately.

Companies House has been moving towards a more digital filing process, and reforms in this area are expected to change how small and micro-entity accounts are submitted, including a greater emphasis on filing through software. The detail and timing of these changes can develop, so it is worth checking the current position on Companies House guidance or asking us how it affects your company. The underlying principle remains the same: your accounts need to be prepared accurately for the period and submitted to the right body in the right way.