FRS 105 Micro Entity Accounts in Seaton

FRS 105 is for companies that qualify for the UK micro-entities regime and choose to apply it. Qualification is based mainly on size: for accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least two of three 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 not the whole test, though. Other eligibility rules and exclusions can apply, and some types of entity cannot use the regime at all. On top of that, the regime is optional, so a qualifying company may still decide that a different reporting framework suits it better.

No. Qualifying for the micro-entities regime does not force a company to use it. FRS 105 is the standard that applies when a qualifying company chooses to apply the micro-entities regime, but that choice is one for the directors to make with the company's circumstances in mind. Some companies prefer the fuller reporting of FRS 102 Section 1A because of lenders, investors or group requirements, while others value the simplicity of FRS 105. Once a framework is adopted it should be applied consistently, and switching later is not always as straightforward as it first appears, so the decision is worth taking seriously.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least two of three 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. There are additional rules, and certain entities are excluded from the micro-entities regime regardless of their size, so the criteria should be checked against the actual company rather than assumed. Where a company sits close to a limit, has had a significant change in activity, or forms part of a larger structure, it is sensible to review eligibility before deciding which framework to apply.

Both are UK financial reporting standards, but they are aimed at different sizes of company and take a different approach. FRS 105 is the micro-entities standard: deliberately simple, with streamlined recognition and measurement rules and much lighter disclosure in the notes. FRS 102 is used by larger companies, with Section 1A providing a reduced-disclosure version for small companies, and it permits or requires a number of treatments that FRS 105 does not allow. In practice, FRS 105 accounts tend to be shorter and easier to read and prepare, while FRS 102 accounts give more detail — which is why some lenders, investors or group parent companies ask to see them.

Yes. If a company is required to file annual accounts at Companies House, that obligation applies whatever framework it uses, including FRS 105. The framework determines how the accounts are prepared and what they contain; it does not remove the filing requirement. Micro-entity accounts are often filed in a reduced form, and the accounts need to be delivered within the company's statutory accounts filing deadline. Preparing the accounts and filing them are two separate steps, and both need to be completed on time, so it helps to work to a plan rather than leaving everything to the last minute.

Yes — they are different documents serving different purposes. FRS 105 Micro Entity Accounts are the company's statutory financial statements, prepared under the micro-entities regime and filed at Companies House. A CT600 is the Corporation Tax Return, submitted to HMRC to report the company's taxable profits and establish the tax due. The accounts are usually the starting point for the tax computation, but adjustments are commonly needed, so the two will not always show identical figures. The submission routes and deadlines differ as well, which is why it makes sense to treat them as two separate pieces of work rather than assuming one covers the other.

A newly incorporated company can use FRS 105 if it qualifies for the micro-entities regime and the directors choose to apply it — the standard itself does not require a minimum trading history. In the first accounting period, eligibility is generally assessed on the figures for that period, and the same rules and exclusions apply as for an established company. Most new companies do start small, but it is still worth confirming eligibility rather than assuming it, particularly if the company has overseas interests, sits within a group, or has an unusual structure or ownership.

The starting point is a complete set of accounting records for the period: sales and purchase records, bank and credit card statements, payroll information, and details of any stock held at the period end. It also helps to have a list of fixed assets bought or sold, any loans or hire purchase agreements, movements on the director's loan account, and details of accruals, prepayments and amounts owed to or by the company. Where available, the previous year's accounts are useful for comparison, along with any recent correspondence from Companies House or HMRC. If bookkeeping is not fully up to date, that is usually something to sort out first, and it can be discussed as part of the preparation.