FRS 105 Micro Entity Accounts in Rushden — Prepared Clearly and Correctly

FRS 105 is the UK financial reporting standard that applies when a qualifying company chooses to use the micro-entities regime. It sets out a simplified basis of accounting — generally historical cost, with far fewer disclosure requirements than a fuller framework — so that the smallest companies can produce shorter, more readable financial statements. It is a reporting framework, not a tax regime, and using it does not change how much Corporation Tax a company owes.

It is intended for companies that qualify as micro-entities under the applicable rules and then choose to apply the micro-entities regime. Qualification depends on the size conditions for the period and on the various eligibility rules and exclusions that apply. Meeting the size tests is usually necessary but not automatically sufficient, so it is worth checking your specific position before deciding. Companies that do not qualify, or that prefer not to use the regime, prepare accounts under a framework such as FRS 102 instead.

No. Qualifying for the micro-entities regime does not oblige a company to use it — the regime is an option, not a requirement. A company that qualifies may still choose to prepare accounts under a fuller framework, for example if a lender, investor or group parent wants more detailed information. The key point is that FRS 105 applies when the micro-entities regime is selected, and that decision should be made deliberately rather than by default.

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 during the period. These are the headline size tests, and other eligibility rules and exclusions can also affect whether the regime is available. Because the conditions interact and can change over time, it is sensible to confirm your position for each accounting period.

Both are UK financial reporting standards, but they are pitched at different sizes of company and produce different accounts. FRS 105 is the micro-entities standard: shorter financial statements, a simpler historical cost basis and significantly fewer disclosures. FRS 102 is a fuller framework used by larger small companies and others, and it offers more accounting options plus a broader set of notes and disclosures. Choosing between them affects the length, detail and content of the accounts rather than the underlying records you need to keep.

Where a company prepares FRS 105 Micro Entity Accounts for a financial year, those accounts form part of its annual accounts filing obligation to Companies House, subject to the filing rules that apply to the company. Filing the accounts is separate from submitting a Corporation Tax Return to HMRC and separate again from filing a Confirmation Statement. Keeping these three obligations distinct helps you plan ahead and avoid assuming that completing one covers another.

Yes, they are separate. FRS 105 financial statements are prepared under the micro-entities regime and filed as company accounts, while the CT600 is the Corporation Tax Return submitted to HMRC to report the company's taxable profits and calculate its tax liability. The figures in the accounts usually inform the tax return, but they are different documents with different purposes, different submission routes and different deadlines. It is worth making sure the two are consistent and prepared with the same underlying records.

In most cases you will need your bookkeeping or accounting records for the period, bank and credit card statements, sales and purchase information, payroll details, records of any assets bought or sold, and details of loans, director balances and share capital. Previous years' accounts are helpful for consistency, along with any information about unusual transactions, changes in ownership or periods when the company was dormant. The more complete the records, the more straightforward it is to prepare accurate FRS 105 accounts for your company.

A newly incorporated company can use the micro-entities regime in its first accounting period if it qualifies as a micro-entity and chooses to apply the regime — being new does not by itself disqualify a company. In practice, the first set of accounts may cover a shorter period and include transactions such as share capital introduced and initial costs, so the figures and the disclosure requirements need to reflect that. It is worth confirming eligibility for the specific period before assuming FRS 105 is the right framework.

Company filing requirements are evolving, with a move towards filing accounts in a digital, structured format at Companies House over time. The direction of travel is toward more tagged, software-prepared submissions rather than simpler PDF or paper filings. Because the detail and timing of these changes can be confirmed only by the official sources, the practical step for most companies is to make sure their records are well organised and that their accounts are prepared accurately now, so they are ready to adapt when the requirements change.