FRS 105 Micro Entity Accounts in Willenhall

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how a qualifying micro-entity prepares and presents its annual financial statements, including the balance sheet, the profit and loss account and the limited disclosures that accompany them. It is a recognised accounting framework in its own right, not simply a shortcut version of a larger standard, and it applies only when a company both qualifies for the micro-entities regime and chooses to use it.

FRS 105 is available to UK companies that qualify for the micro-entities regime and decide to apply it. Qualification is determined by the size conditions set out in the rules, together with any exclusions that may apply — for example, certain types of entity are not eligible regardless of size. Meeting the size tests alone does not guarantee eligibility, so the position should be checked for each company rather than assumed from turnover or headcount alone.

No. The micro-entities regime is an available accounting regime, not an automatic one. A company that qualifies may choose to apply it and therefore prepare FRS 105 Micro Entity Accounts, or it may decide to report under a fuller framework instead — for instance where a lender, investor or group parent needs more detail. The decision is usually best made by looking at the company's reporting needs and any contractual or group requirements before the period is finalised.

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. These are the headline tests, and the relevant rules and exclusions still apply on top of them, so a company that appears to fit the numbers should confirm its position carefully before adopting the regime.

Both are UK accounting frameworks, but they are aimed at different sizes of company and sit at different levels of detail. FRS 102 is the standard used by a much wider range of businesses, including small and medium-sized companies and some larger entities, and it involves fuller recognition, measurement and disclosure requirements. FRS 105 is the streamlined framework for qualifying micro-entities and, where a company is eligible and chooses the micro-entities regime, it produces simpler financial statements. Choosing between them is a question of eligibility and of what the accounts need to show.

Where a company prepares FRS 105 Micro Entity Accounts for its statutory financial statements, those accounts form the basis of what is filed at Companies House, subject to the filing requirements and any applicable exemptions or options that apply to the company. Filing the accounts is a separate process from submitting a Corporation Tax Return to HMRC, and separate again from a Confirmation Statement, so each obligation needs its own attention and its own records.

Yes. FRS 105 Micro Entity Accounts are financial statements prepared under the micro-entities regime, while a CT600 is the Corporation Tax Return submitted to HMRC to report the company's taxable profits and calculate the tax due. The figures in the accounts often inform the return, particularly the profit figure used as a starting point, but the two documents serve different purposes and go to different bodies. Adjustments such as capital allowances, disallowable expenses and losses brought forward are dealt with in the tax computation rather than in the accounts themselves.

A newly incorporated company can apply the micro-entities regime and prepare FRS 105 Micro Entity Accounts if it meets the eligibility conditions for its accounting period and chooses to do so. In practice, a first period may be shorter or longer than twelve months, which can affect how the size conditions are assessed, and a first set of accounts also has to cover matters such as share capital and any start-up costs. It is worth checking the position early in the company's life so the accounting records are set up in a way that supports the framework you intend to use.

Typically you would provide your bookkeeping records or accounting software access, bank statements and reconciliations, sales and purchase information, payroll details where relevant, details of any fixed assets and depreciation, stock or work in progress, loan and finance agreements, and any previous year's accounts. Information on share capital, dividends and director's loan movements is also useful, as is anything that affects how the company presents its figures. The more complete the records, the more straightforward it is to prepare accurate FRS 105 financial statements from them.

The UK filing framework for small and micro-entity accounts has been under review, with a move towards filing accounts in a more structured digital format and greater emphasis on the information submitted to Companies House. Because the detail and timing of these changes affect companies directly, it is sensible to keep the position under review and to make sure your accounting records are organised well enough to support whatever format is required. We can talk you through how these developments may affect your FRS 105 Micro Entity Accounts and what it means for your record-keeping.