FRS 105 Micro Entity Accounts in Wadebridge

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how a company that qualifies for, and chooses to apply, the micro-entities regime prepares its annual financial statements — typically a balance sheet, a profit and loss account and a limited set of notes. It is deliberately simpler than the standards used by larger companies, with a historical cost measurement basis and significantly reduced disclosure requirements, which keeps the accounts proportionate to the size and complexity of a small business.

FRS 105 is available to companies that qualify for the micro-entities regime and decide to apply it. Qualification depends on meeting the size conditions and on not being excluded by other rules — for example, certain public companies and some regulated financial businesses cannot use the regime regardless of their size. Because eligibility is not automatic, it is worth checking your position against the current criteria before assuming FRS 105 is the right framework for your company.

No. Qualifying for the micro-entities regime and applying it are two different things. A company that meets the size conditions may choose to apply the micro-entities regime and prepare FRS 105 accounts, or it may instead prepare its accounts under a different framework such as FRS 102. The decision often comes down to what the directors and shareholders want from the accounts, whether the company needs a more detailed set of financial statements for lenders or investors, and how much disclosure is genuinely useful.

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 during the period. Meeting those size conditions is not the whole story, because other eligibility rules and exclusions also apply, and companies that move above or below the thresholds can be treated differently depending on their history. We assess eligibility case by case rather than treating the thresholds as a simple tick-box test.

Both are UK financial reporting standards, but they are written for different sizes of company. FRS 105 is the micro-entities standard: fewer disclosures, a historical cost basis, no fair value accounting for investment property or financial instruments, no revaluation of assets, and deferred tax is not recognised. FRS 102 is used by larger small companies and by entities that need or want a fuller set of financial statements, with more recognition and measurement options and considerably more disclosure. Which one applies to you follows from the regime your company qualifies for and chooses to adopt.

Yes — where a company prepares FRS 105 accounts for a financial year, those accounts form the basis of the annual accounts filing at Companies House, subject to the filing requirements that apply to the company. It is worth knowing that the accounts filing framework is changing: Companies House has been introducing reforms that will affect small and micro-entity companies, including a move towards software-based filing and the filing of additional information. The detail and timing of those changes are subject to confirmation, so it is sensible to check the latest guidance, or ask us, before your next filing date.

Yes, they are two distinct things. FRS 105 accounts are the company's financial statements, prepared under the micro-entities reporting framework and generally filed at Companies House. A CT600 is a Corporation Tax Return submitted to HMRC, which reports the company's taxable profits and is based on the figures in the accounts but adjusted for tax purposes. They are prepared for different recipients, filed through different channels, and on different timescales. Preparing the accounts does not automatically mean the CT600 has been dealt with, so it is important to know who is handling each.

A newly incorporated company can potentially use FRS 105 from its first accounting period if it qualifies for the micro-entities regime and chooses to apply it. In practice, the first year is often straightforward — a short trading period, a modest balance sheet total and few or no employees — but first-year accounts still need the opening position recorded correctly, any share capital or director's loan accounted for, and the right framework chosen. It is worth confirming the position early rather than leaving it until the accounts are due, and if the company later grows beyond the size conditions, the framework may need to change.

We normally need your bookkeeping or accounting records for the period, bank statements and reconciliations, details of sales and purchases if they are not already summarised, payroll information, a list of assets bought or sold, any loans or finance agreements, and the director's loan account position. Bring-your opening balances or last year's filed accounts, plus details of any share capital, dividends or changes in ownership. The more complete and organised the records are, the more efficiently the FRS 105 Micro Entity Accounts can be prepared, and the clearer the picture we can give you of the company's position.