FRS 105 Micro Entity Accounts in West: Clear Financial Reporting for Qualifying Companies

FRS 105 is the financial reporting standard within UK accounting rules that applies to the micro-entities regime. It is the most streamlined framework available, built specifically for the smallest qualifying companies. It sets out how the balance sheet and profit and loss account should be prepared and measured, along with the minimum notes that must accompany them. Because the disclosure requirements are pared back compared with larger frameworks, the resulting financial statements are shorter and simpler to read. It applies alongside the micro-entities regime rather than on its own — a company uses FRS 105 because it has qualified for and chosen that regime.

FRS 105 is available to companies that qualify as micro-entities under UK company law and decide to apply the micro-entities regime. For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 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 limits on its own is not the whole picture, because other eligibility rules and exclusions can apply depending on the company's circumstances, so eligibility should always be checked rather than assumed.

No. Qualifying as a micro-entity and using the micro-entities regime are two separate things. A company that qualifies may choose to apply the regime and prepare its accounts under FRS 105, or it may instead prepare them under another framework it is entitled to use, such as FRS 102 including the reduced disclosure section for small companies. What you cannot do is mix frameworks within a single set of accounts. Some companies deliberately opt for FRS 102 because they want options or disclosures that FRS 105 does not provide, or because a lender, investor or parent company expects that level of detail.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the 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. The size conditions are only part of the test. Certain companies are excluded from the regime, and the way the conditions are assessed can be affected by the company's circumstances and by how its figures move year to year. Because of that, eligibility for FRS 105 Micro Entity Accounts should be reviewed against the specific facts rather than treated as a simple box-ticking exercise.

Both sit within UK accounting standards, but they serve different sized companies and offer different levels of flexibility. FRS 105 is the micro-entities framework: measurement is kept simple, the disclosure requirements are minimal, and certain accounting options — such as revaluing fixed assets — are not available. FRS 102 is the main standard for UK companies, and its reduced disclosure section for small companies allows a wider range of accounting policies, fair value measurement in more situations, and considerably more notes to the accounts. Practically, FRS 105 produces shorter, simpler financial statements, while FRS 102 gives more choice at the cost of more preparation and more disclosure.

Yes. Where a company is required to prepare and file accounts, those accounts must be delivered to Companies House, and micro-entity accounts can be filed using the micro-entity filing options that apply to the regime. Filing the accounts is a separate exercise from anything sent to HMRC, and the filed accounts become publicly available. It is worth remembering that Companies House registers accounts rather than checking or approving the figures in them, so accuracy at the preparation stage is the company's responsibility. Accounts must be filed within the statutory deadline that applies to your company.

Yes, they are two distinct documents with different purposes and different destinations. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime and filed at Companies House. A CT600 is the Corporation Tax Return submitted to HMRC, calculated on the company's taxable profits under tax legislation rather than under an accounting framework. They are usually prepared from the same records, but the figures can differ once tax adjustments are made. Filing one does not satisfy the obligation to file the other, and they have separate deadlines.

It can, if it qualifies as a micro-entity and chooses to apply the micro-entities regime for the period in question. In a first accounting period, size is generally considered in relation to that period, so many newly incorporated companies that start small are able to use FRS 105 from the outset. The practical consideration is what happens next: a business expecting rapid growth may find that it stops qualifying before long, which means changing framework partway through its early years. Planning ahead and choosing the framework that fits your expected trajectory usually saves effort later.

We normally need a clear picture of the company's trading for the period, so useful items include bank statements and reconciliations, sales and purchase records, payroll information, details of any assets bought or sold, loan and finance agreements, stock or work-in-progress information where relevant, and the previous year's accounts if there are any. Details of any significant one-off events during the period, such as a change in ownership or an unusual item of income or expense, are also helpful. The more complete the records, the more straightforward the accounts are to prepare and the easier it is to confirm that the micro-entities regime remains appropriate.

Companies House has been implementing reforms that affect what small and micro-entity companies file, including a move towards requiring more information to be filed — in particular the profit and loss account — rather than a balance sheet alone, and the removal of abridged accounts for small companies. These changes are being brought in through secondary legislation, so the detail and the dates on which they take effect for a given financial year should be checked against the latest official guidance. Because the requirements are changing, it is worth reviewing the filing position for each set of accounts rather than relying on how it was done in previous years.