FRS 105 Micro Entity Accounts in Yeadon: Straightforward Reporting for Qualifying Small Companies

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how the financial statements of a qualifying micro-entity should be prepared when that company chooses to apply the micro-entities regime. It is a simpler, shorter framework than the standards used by larger companies: it is based on historical cost and permits far fewer disclosures, so the accounts typically consist of a simplified balance sheet with a small number of notes. FRS 105 is a reporting framework, not a tax regime and not a filing portal — it governs how the accounts are drawn up.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and then choose to apply it. Qualifying is a two-part test: the company has to meet the relevant size conditions, and it must not be caught by any of the other eligibility rules or exclusions that apply to the regime. Meeting the size thresholds on their own does not automatically mean a company qualifies. Once a company does qualify, applying the regime is a choice — it is not forced on anyone — and FRS 105 is the standard that applies when that choice is made.

No. Qualifying for the micro-entities regime and applying it are separate things. A company that falls within the size conditions is eligible to use the regime, but the directors can instead prepare accounts under a fuller framework such as FRS 102, which provides more disclosure and a more detailed view of the business. Larger companies, or those with lenders, investors or group relationships that expect fuller reporting, often take that route deliberately. FRS 105 only comes into play when the micro-entities regime is the framework actually chosen for the period.

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 during the period. These are the headline size tests, and they sit alongside other rules and exclusions that can affect whether a particular company is eligible for the micro-entities regime. Because the conditions are applied to specific periods and depend on your company's own figures, it is worth checking your position rather than assuming you fall inside or outside the regime.

Both are UK financial reporting standards, but they sit at different levels of the reporting framework. FRS 105 is the micro-entities standard: it is based on historical cost and allows a much smaller set of disclosures, producing shorter accounts. FRS 102 is the standard generally used by small and larger entities, and it requires more disclosure and offers a wider range of accounting treatments, including fair value options in some circumstances. FRS 102 therefore gives readers a fuller picture of the company, while FRS 105 prioritises simplicity and reduced reporting. Which one is appropriate depends on eligibility and on what the directors and the users of the accounts need.

Where a company is required to file annual accounts, those accounts are submitted to Companies House — and if the company has chosen the micro-entities regime, the accounts filed will be its FRS 105 Micro Entity Accounts, prepared and filed in line with the applicable requirements. Filing the annual accounts is only one of a company's obligations, and it is separate from its Corporation Tax position. Filing formats and requirements do change from time to time, so it is sensible to confirm the current position for your period before submitting anything.

Yes, they are distinct. FRS 105 accounts are the company's financial statements, prepared under the micro-entities reporting framework and generally filed at Companies House. A Company Tax Return (CT600) is the Corporation Tax filing made to HMRC, and it works from the company's taxable profits rather than simply copying the reported figures. Adjustments, allowances and timing differences can mean the taxable amount differs from the profit shown in the accounts. Keeping both strands consistent — and understanding where they legitimately differ — is one of the practical reasons companies ask for help with both.

In most cases we need a clear record of the company's transactions for the accounting period, together with the balances at the start and end of it. That usually means bookkeeping or accounting software data, bank statements, sales and purchase records, payroll or employee information, details of any loans or amounts owed to and from the company, and a list of assets such as equipment or vehicles. If the company has traded for the first time, we will also need the incorporation details and opening balances. The more complete and tidy the records, the more straightforward the preparation tends to be — and if your bookkeeping needs tidying up first, that can be arranged as part of the work.