FRS 105 Micro Entity Accounts in Stone: Straightforward Financial Reporting for Qualifying Companies

FRS 105 is the financial reporting standard used for statutory accounts prepared under the UK micro-entities regime — the most streamlined accounts framework available to qualifying companies. It sets out how micro-entity accounts should be drawn up, with fewer disclosure requirements and simpler measurement rules than FRS 102. It applies to the company's annual financial statements, not to its tax return. Where a company qualifies for the micro-entities regime and chooses to apply it, FRS 105 is the standard used to prepare those FRS 105 Micro Entity Accounts.

FRS 105 is intended for companies that qualify for the micro-entities regime and decide to apply it. It is not open to every small company: alongside the size conditions, the regime has its own eligibility rules and a number of exclusions, so certain entities and structures cannot use it regardless of how small they are. Even where a company does qualify, applying the regime is optional — a qualifying company could instead prepare accounts under the small companies regime and FRS 102. In short, FRS 105 is available to qualifying companies that choose the micro-entities route, which is why it is worth checking your position before assuming either way.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies can choose to apply it and prepare FRS 105 Micro Entity Accounts, or it can prepare accounts under the small companies regime using FRS 102 instead. FRS 105 only comes into play when the micro-entities regime is actually chosen. Some directors prefer FRS 102 because they want options such as revaluation or fair value measurement, or because a lender, investor or group has asked for a particular presentation. Others prefer FRS 105 because the reporting is shorter and easier to follow. It is a decision about what suits the company, not a rule that bites automatically.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the following 3 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. Meeting the size conditions is only part of the picture. The micro-entities regime also carries its own eligibility rules and exclusions, and there are provisions covering situations such as newly incorporated companies and companies whose size has changed from one period to the next. Because the test combines size and eligibility, it is worth looking at your company's specific circumstances and the accounting period in question rather than relying on a general rule of thumb.

FRS 102 is the main UK financial reporting standard and applies to most companies, including small companies that do not use the micro-entities regime. FRS 105 is a separate, more streamlined standard written specifically for qualifying micro-entities. The practical differences show up in measurement and disclosure: FRS 105 generally keeps assets at cost rather than allowing revaluation, does not recognise deferred tax, and requires far fewer notes to the accounts. FRS 102 permits more accounting options but brings more disclosure and more complexity as a result. Which one is appropriate depends on whether the company qualifies for the micro-entities regime, whether it chooses to apply it, and what the readers of the accounts actually need to see.

FRS 105 Micro Entity Accounts are the company's statutory financial statements and are normally filed at Companies House, along with the company's other filings such as the confirmation statement. A CT600 is something different: it is the Corporation Tax Return submitted to HMRC and it deals with tax, not financial reporting. The figures in the accounts usually feed into the tax return, but they are separate documents prepared under separate rules. Preparing and filing the accounts does not, on its own, deal with the company's Corporation Tax obligations, and submitting a CT600 does not satisfy the accounts filing requirement.

Potentially, yes — if it qualifies for the micro-entities regime and chooses to apply it. A newly incorporated company has no previous trading history, so the eligibility rules work a little differently at the start, and there are specific provisions dealing with newly incorporated companies. In practice, directors tend to look at expected first-period figures for turnover, balance sheet total and average employees, and then consider whether the simpler reporting basis suits how the business will be run. It is also worth thinking ahead: if the company expects to grow, or if a lender or investor will want a particular level of disclosure, that may influence the choice. Either way, the accounts still need to be prepared from complete and accurate records.

Typically we would look for a trial balance or nominal ledger covering the period, bank and cash records, details of sales and purchases, fixed asset and depreciation information, stock or work-in-progress figures, debtor and creditor balances, accruals and prepayments, any loan or finance agreements, director's loan account movements, share capital details, and the previous year's accounts. If the company is VAT registered or runs payroll, those records are useful too. Having the information complete and well organised reduces queries and helps make sure the FRS 105 Micro Entity Accounts reflect what genuinely happened in the business during the period.

Companies House has been reforming how accounts are filed, with a move towards structured, software-based filing rather than PDF or paper submissions for many companies. This is being introduced in stages, so what applies to you can depend on your accounting period, your company type and how the accounts are submitted. Alongside that, there is a broader shift towards digital, tagged financial data across company filing. Because the detail and the timing affect different companies differently, the sensible approach is to confirm the current position for your company at the time the accounts are prepared, rather than assuming a particular format will be accepted.