FRS 105 Micro Entity Accounts in Wilnecote

FRS 105 is the UK financial reporting standard for micro-entities. It sets out the recognition, measurement and disclosure requirements that apply when a qualifying company chooses to use the micro-entities regime. Compared with other frameworks it is deliberately short, with simplified formats for the balance sheet and profit and loss account and far fewer notes. It is a distinct accounting framework in its own right, not simply a shortened version of another standard.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and choose to apply it. Qualification depends on meeting the applicable size conditions and not falling within any of the relevant exclusions — for example, certain types of entity are outside the regime regardless of size. Meeting the size conditions alone does not automatically mean a company is eligible, which is why a review of your specific circumstances is sensible before deciding to prepare accounts under FRS 105.

No. The micro-entities regime is an available accounting regime rather than a mandatory one. A company that qualifies can generally choose whether to apply it. If the regime is chosen, FRS 105 applies. Some directors prefer the additional disclosures and flexibility of a larger framework, particularly where lenders, investors or group arrangements are involved, so the decision is worth taking deliberately rather than by default.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the following 3 applicable 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 size tests and they are subject to the relevant rules and exclusions, including how thresholds are applied in the first period and how the conditions are assessed on an ongoing basis. A conversation about your figures is usually the quickest way to establish where you stand.

FRS 102 is a fuller financial reporting standard that applies to a much wider range of companies, including small companies that do not use the micro-entities regime. It permits more accounting policy choices, such as revaluation and fair value measurement in certain circumstances, and requires more extensive notes. FRS 105 is narrower and simpler, with a historical cost basis and reduced disclosure, which makes it quicker to prepare but less flexible if you need to present more detail.

Financial statements prepared under FRS 105 are still statutory accounts, so the usual filing obligation to Companies House generally applies. What changes under the micro-entities regime is how the accounts are prepared and how much is disclosed, not whether they need to be filed. Directors remain responsible for approving the accounts, and the filing requirements depend on your company's circumstances, so it is worth confirming the position for your specific year end.

Yes, they are separate. The FRS 105 accounts are the company's financial statements, prepared under the micro-entities framework. A CT600 is a Corporation Tax Return submitted to HMRC, and it is based on the company's taxable profits after any adjustments required by tax rules. The two documents are prepared for different purposes and sent to different bodies, even though they draw on the same underlying records. A Confirmation Statement is a separate filing again and contains no financial information.

Typically we need your sales and expense records, bank and credit card statements covering the full period, details of any loans or finance agreements, invoices for significant asset purchases, payroll information if you employ staff, stock or work-in-progress figures where relevant, and details of anything unusual such as a change in shareholding or a new income stream. It also helps to know your year end and whether you have filed accounts before. If your records are incomplete, we can talk through what is missing and how best to fill the gaps.

A newly incorporated company can potentially use FRS 105 if it qualifies for the micro-entities regime and chooses to apply it. In the first accounting period the size conditions are assessed using the applicable rules for that period, which can differ from the ongoing tests. Rather than assuming a new company automatically qualifies, it is worth looking at expected turnover, the balance sheet position and employee numbers before deciding how to prepare the first set of accounts.

The UK company filing framework is being modernised, with Companies House moving towards software-only filing of accounts and revised size thresholds for accounting periods beginning on or after 6 April 2025. In practice this means directors should not assume that the format or method they used last year will automatically remain available. The rules on eligibility, filleted or abridged information and how accounts are submitted are all worth checking before your next year end so there are no surprises.