FRS 105 Micro Entity Accounts in Silverdale

FRS 105 is the UK financial reporting standard designed for micro-entities. It sets out the rules for preparing and presenting the annual financial statements of a company that applies the micro-entities regime, including how items such as fixed assets, debtors, creditors and provisions are measured. Its main feature is simplicity: it uses a shorter, more prescriptive format and requires far fewer notes than the standards used by larger companies, which keeps the accounts concise and easier to read.

FRS 105 is intended for companies that both qualify for the UK micro-entities regime and choose to apply it. Qualifying is about size and about not being excluded by other rules — certain entities, such as some financial institutions and companies that are part of a larger group, may not be eligible regardless of size. Because eligibility depends on your specific circumstances and not just on turnover or headcount, it is worth checking your position before deciding to prepare micro-entity accounts.

No. Applying the micro-entities regime is a choice available to qualifying companies, not something that is imposed on them. A company that qualifies may instead choose to prepare its accounts under a fuller standard such as FRS 102. Some directors prefer the simplicity of FRS 105 Micro Entity Accounts, while others opt for fuller reporting because of lenders, investors, group requirements or their own preference for greater disclosure.

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. Meeting the size conditions alone does not automatically mean a company can use the regime, because other eligibility rules and exclusions also apply, and the tests are applied across the company and, where relevant, any group. If you are close to a limit or your circumstances have changed, take advice before assuming you qualify.

FRS 102 is the standard used by most UK companies that are not micro-entities, including small and medium-sized companies, and it offers more accounting policy choices and requires considerably more disclosure. FRS 105 is narrower and simpler: it applies to qualifying micro-entities that choose that regime and produces shorter accounts with fewer notes. In practical terms, the choice affects how your figures are presented and how much detail is published, so it is worth considering what your readers — such as banks, landlords or investors — may expect to see.

FRS 105 accounts are the statutory financial statements of the company, and a company that prepares them will ordinarily need to file accounts with Companies House for the relevant period. The accounts themselves and the act of filing are separate steps, and filing is subject to Companies House requirements and deadlines. It is also worth noting that Corporation Tax is handled separately: a CT600 is submitted to HMRC and is not the same thing as your statutory accounts. We can help you understand which deadlines apply to your company and keep the two processes clearly separated.

A newly incorporated company can apply the micro-entities regime from its first accounting period if it qualifies and the directors choose that route. In practice, the first year is often the simplest to assess because the company is starting from a low base, but the position still has to be tested against the criteria and any exclusions. If your plans involve rapid growth, taking on investment or significant borrowing, it is sensible to think ahead about whether micro-entity reporting will continue to suit the company.

We normally need your bookkeeping or accounting records for the period, bank statements and reconciliations, sales and purchase documentation, payroll information if you employ staff, details of assets purchased or sold, loan and lease agreements, and any stock or work-in-progress figures. Details of directors' loans, dividends and share capital are also relevant, along with the previous year's accounts for comparison. The cleaner and more complete the records, the more straightforward the preparation of your FRS 105 Micro Entity Accounts tends to be.

Reforms introduced through the Economic Crime and Corporate Transparency Act are expected to change how smaller companies file their accounts at Companies House. In broad terms, the direction of travel is towards filing more information, including profit and loss figures, and towards accounts being filed using software rather than in paper or simpler formats. The exact requirements and their start dates are set out in Companies House guidance, so it is worth checking the current position for your accounting period rather than relying on how filing worked in previous years.