FRS 105 Micro Entity Accounts in Waveney: Simple, Streamlined Financial Reporting for Qualifying Micro-Entities

FRS 105 is the UK financial reporting standard that applies to micro-entity financial statements. It forms part of UK GAAP and is written specifically for companies that qualify for the micro-entities regime and choose to use it. Compared with standards such as FRS 102, FRS 105 is much shorter and simpler: the accounts are largely balance-sheet focused, the notes are limited, and certain more complex accounting treatments are not available. It governs how the accounts are prepared and presented — it is not a tax return, and it does not replace the separate filings a company makes to HMRC.

FRS 105 is available to companies that qualify for the UK micro-entities regime and decide to apply it. Qualification is based on the size tests in the regime, but those tests are not the whole story: certain entities are excluded, and other eligibility rules can apply. A company that qualifies is not obliged to use the micro-entities regime — it can choose a different framework instead. Because eligibility and the choice of framework can change as a business grows or its circumstances shift, it is worth confirming the position for each set of accounts rather than assuming it carries over.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A qualifying company can choose to apply the micro-entities regime — in which case FRS 105 applies — or it can prepare its accounts under another framework such as FRS 102. The decision is usually a practical one, based on the company's size, structure, ownership, financing arrangements and any plans that might affect how its accounts need to look. Once a framework is chosen, it should be applied consistently, and a change of framework is generally only made when there is good reason and it is properly dealt with.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of these 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 those size conditions is the starting point rather than the whole test — certain types of entity are excluded from the regime, and other rules and conditions can affect whether micro-entity accounts can be used. Eligibility should therefore be checked against the specific rules and the company's own circumstances, and revisited if the business grows or its activities change materially.

The main difference is the level of detail and complexity. FRS 102 is the framework used by most other companies and contains far more recognition, measurement and disclosure requirements, including options such as revaluing assets and recognising deferred tax. FRS 105 is a simplified micro-entity standard: the accounts are shorter, the disclosures are far fewer, and those more advanced options are not available. The outcome is a set of financial statements that gives a straightforward view of a micro-entity's position, rather than the fuller presentation you would expect under FRS 102.

Yes. Where a company prepares accounts under the micro-entities regime, those accounts are delivered to Companies House as part of its statutory filing obligations. Micro-entity accounts are filed using the appropriate filing route, and there are statutory deadlines attached to that filing. This is a separate obligation from anything submitted to HMRC, so it is important not to treat an accounts filing as covering the company's tax position, or vice versa. Preparing the accounts and dealing with the filing in good time helps avoid unnecessary last-minute pressure.

Yes, they are separate things. FRS 105 deals with how the company's statutory accounts are prepared and presented for the micro-entities regime, and those accounts go to Companies House. The Corporation Tax Return, known as a CT600, is submitted to HMRC and reports the company's taxable profits and tax position. The figures are related because both are built from the same underlying records, but the two documents serve different purposes and follow different rules. A CT600 is not a substitute for accounts, and filing accounts does not settle the company's Corporation Tax obligations.

As a starting point, we would usually look for the company's accounting records for the period: bank and cash statements, sales and purchase records, payroll information, details of equipment and other asset purchases, loan agreements, stock or work-in-progress where relevant, and any amounts owed to or by directors. Details of the previous year's accounts are helpful so that comparatives and opening balances can be checked. If your bookkeeping is up to date, preparation tends to be quicker; if records are incomplete, that is not unusual and can usually be worked through. The more complete and clearly organised the information, the more straightforward it is to prepare FRS 105 Micro Entity Accounts that properly reflect the company's position.