FRS 105 Micro Entity Accounts in Wotton-under-Edge

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It provides simplified rules for recognising, measuring and presenting the items in a company's annual financial statements, with fewer disclosures and less complexity than the frameworks used by larger entities. It is an accounting framework, not a tax regime and not a filing in its own right. When a qualifying company chooses the micro-entities regime, FRS 105 is the standard used to prepare its accounts.

FRS 105 is available to companies that qualify for the UK micro-entities regime and choose to apply it. Qualification is not automatic and depends on both the size criteria and a set of eligibility rules and exclusions, so a company that looks small on paper can still fall outside the regime. It is always worth checking your specific position rather than assuming you qualify. For a company in Wotton-under-Edge, we can review your circumstances and explain whether the micro-entities regime is likely to be available and sensible for you.

No. The micro-entities regime is an available accounting regime rather than a mandatory one. A company that qualifies can generally choose to apply it, but it is also possible to prepare accounts under a fuller framework such as FRS 102, which may suit businesses that want or need more detailed reporting — for example where a lender, investor or group relationship expects it. The choice should be made with your directors' wider obligations and the needs of the people who read your accounts in mind.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 applicable size conditions, subject to the relevant rules and exclusions: 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 the size conditions alone does not guarantee eligibility, because other rules and exclusions can apply — for instance certain company types or activities are not able to use the regime. It is the combination of size and those wider rules that determines whether FRS 105 is available.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 102 is the fuller framework and includes more detailed recognition, measurement and disclosure requirements, along with a reduced-disclosure option for smaller companies. FRS 105 is the more streamlined standard tied to the micro-entities regime, with simpler measurement rules and far fewer disclosures. Which one suits your company depends on whether you qualify for the micro-entities regime, whether you choose to apply it, and what your readers and other obligations require.

Accounts prepared under FRS 105 are still annual accounts for the company, so in the normal way they form the basis of the accounts filing made at Companies House for the relevant period. The format in which they are filed is a separate consideration from how they were prepared, and filing requirements have been changing for small and micro-entity companies. We can prepare the financial statements and then deal with the accounts filing as a distinct step, while keeping that work clearly separate from your Corporation Tax position.

Yes, and it is a common point of confusion. FRS 105 Micro Entity Accounts are the company's financial statements, prepared under the accounting framework and filed with Companies House. A CT600 is a Corporation Tax Return submitted to HMRC, and it is prepared on a tax basis — starting from the accounts but adjusted for tax rules such as disallowable expenses, capital allowances and timing differences. The two are connected, because the accounts usually provide the starting point for the tax computation, but they are separate documents going to separate bodies. A Confirmation Statement is separate again.

A newly incorporated company can potentially use FRS 105, but it is not automatic. In the first period there is no prior-year history to measure against, so eligibility is assessed using the rules that apply to a company's first accounting period, alongside the usual exclusions. A newly formed company may also have limited activity, which is helpful, but it still needs to qualify for the micro-entities regime and the directors need to choose to apply it. It is worth confirming the position early so your first set of accounts is prepared on the basis you intend to keep using.

As a starting point, we normally need your bookkeeping or accounting records for the period, bank and credit card statements, sales and purchase information, payroll or employee details, and records of any assets, loans or agreements the company has entered into. Prior year accounts are useful for consistency, and details of any significant one-off transactions help us understand the year properly. If your records are incomplete, we can talk through what is missing and how best to fill the gaps before preparing your FRS 105 Micro Entity Accounts.

The way small and micro-entity accounts are filed has been under review, with a move towards filing accounts in a more structured, digital format rather than as simpler abbreviated or filleted versions. The detail matters and the position can vary depending on your company and period, so it is unwise to rely on general summaries. If you would like to understand how these developments could affect your own filing, we can talk through your circumstances and what you may need to prepare for.