Micro-entity vs small company accounts
Both are for small UK companies. They differ in size limits and in how much you prepare and file.
At a glance
- Micro-entity: the smallest tier
- Simplest accounts (FRS 105)
- Small companies have higher limits
- Many companies can choose either
What is the difference in plain English?
Every UK limited company must prepare annual accounts. The law sorts companies into size bands, and the smaller the band, the less you are required to prepare and file. A micro-entity is the smallest band. A small company is the next band up.
Think of it as a ladder. The lower you are on the ladder, the shorter your accounts can be. Most one-person companies, contractor companies and small property companies sit at the bottom rung, so they are micro-entities.
It is worth knowing that being a micro-entity is not a separate type of company. It is just a label for how your company can present its accounts. Your company is still a private limited company, with the same duties as any other.
Side-by-side comparison
| Micro-entity | Small company | |
|---|---|---|
| Size limits | Meet any 2 of 3: turnover up to £1 million, balance sheet total up to £500,000, up to 10 employees | Higher limits than a micro-entity. The current figures are on GOV.UK |
| Accounting standard | FRS 105, the simplest standard | A fuller standard, usually FRS 102 section 1A |
| Amount of detail | The minimum the law requires | More notes and more disclosure |
| Preparation time and cost | Usually the quickest and cheapest | Usually more work, so a higher fee |
| Best for | One-person companies, contractors, small property and trading companies | Growing companies, or those who want to show more to lenders and investors |
| Company Tax Return | Still required, filed with HMRC | Still required, filed with HMRC |
The last row matters. Whichever type of accounts you choose, the Company Tax Return is a separate filing with HMRC and must still be done.
How the micro-entity test works
A company qualifies as a micro-entity if it meets at least two of three limits: turnover of £1 million or less, a balance sheet total of £500,000 or less, and an average of 10 employees or fewer.
Turnover is the money your company earns from selling goods or services before VAT. The balance sheet total is the value of everything the company owns, before taking off what it owes. Employees are counted as an average over the year.
Not every type of company can use the micro-entity rules, so a quick check is always worth doing. Use our micro-entity eligibility calculator to test your own figures.
How small company limits differ
Small companies have higher limits than micro-entities, so a company with more turnover, a bigger balance sheet or more staff can still be small. Those limits can change, so we do not quote them here. The current figures are on GOV.UK in the guidance for preparing company annual accounts, and we check them for you when you order.
A company that is too big to be a micro-entity but still meets the small company limits can file small company accounts. A company that exceeds the small limits moves up again, and the rules become more demanding.
Which one should you choose?
If you meet the micro-entity limits, FRS 105 accounts are normally the best choice. They are the quickest and cheapest to prepare, and they give you everything the law requires.
Most owner-managed companies, including contractors, consultants, property SPVs and start-ups, are happy with micro-entity accounts.
What stays the same either way
The deadlines do not change. Accounts for a private company are due at Companies House 9 months after the financial year end, and first accounts are due 21 months after the company was registered. The Company Tax Return is due 12 months after the end of the accounting period.
You must also keep proper records, file a confirmation statement every year and pay Corporation Tax on time. See our filing deadlines guide for every date.
Related services and tools
Next steps for your company.
Micro-entity accounts
FRS 105 accounts and your tax return, filed for you.
£399 + VAT up to £100K turnover
Comparison FAQs
Straight answers to common questions.
Can a micro-entity choose to file small company accounts?
Generally yes. A company that qualifies as a micro-entity can usually choose to file a fuller set of accounts instead.
Which is cheaper to prepare?
Micro-entity accounts are usually the simplest and quickest to prepare, so they cost less.
Do both file a Company Tax Return?
Yes. Every company files a Company Tax Return with HMRC regardless of the accounts type.
Where can I find the current small company limits?
On the GOV.UK pages for preparing company annual accounts. We confirm them for you when you order.
Can my company change from one to the other?
Yes. Your size is tested each year, so your company can move up or down as its figures change.
Not sure which accounts you need?
We confirm the right accounts and file them for a fixed fee.