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FRS 105 is the Financial Reporting Standard applicable to micro-entities in the UK (issued by the Financial Reporting Council). The accounting standard applies to the financial statements of small limited companies who choose to apply the micro-entities regime. It applies to accounting periods beginning on or after 1 January 2016.
FRS 105 requires all small businesses to publish their:
You don’t need to provide detailed notes with these statements, just some basic information about your company director’s transactions.
A small business qualifies as a micro entity as long as it doesn’t exceed two or more of the following criteria in a financial year:
Unless you’re a newly formed company, you need to have met these conditions for two consecutive years. If you tick off more than two of these criteria, then you’ll no longer be considered to be a micro-entity.
You’ll need to submit your FRS 105 accounts to HMRC and Companies House and every year as part of your company year end accounts filing. As explained in our article, as part of your Annual Accounts filing HMRC requires you to submit your Statement of Financial Position, Income Statement, and footnotes showing any director transactions.
Companies House requires a similar filing; if you prepare your annual accounts using the financial reporting standard for micro-entities (FRS 105) then you need to submit two documents from your Annual Accounts to Companies House: the Statement of Financial Position and the Footnotes. The documents you submit will be published by Companies House on its website and can be viewed by anyone. As well as our article on Year End accounts that we mentioned above we’ve got a helpful article that gives more information on what else you need to file to Companies House and HMRC as a director of a limited company.
Yes. A good example of this would be if third parties have an interest in the company’s financial affairs and annual accounts. Accounts prepared under FRS 105 may not provide the level of detail that the third party requires.
In these situations, companies may decide to prepare accounts under a different Financial Reporting Standard called FRS 102. This requires more detailed information to be published in the accounts, and the application of specific accounting principles that aren’t required under FRS 105. If you’re a Crunch client and you want to prepare your accounts under FRS 102, please contact your client managers and we can arrange a referral to a Crunch trusted partner.
As always, our guidance is just guidance and nothing beats getting expert individual advice. If you need help with FRS 105, you might benefit from a comprehensive accountancy service like ours. Get in touch today.