Glossary · UK
What is Micro-Entity Accounts?
A simplified set of annual accounts for the smallest UK companies, requiring only a basic balance sheet at Companies House with no requirement to file a profit and loss account.
Full Definition
Micro-entity accounts are prepared under FRS 105, the UK financial reporting standard for micro-entities. To qualify, a company must satisfy at least two of three criteria: annual turnover not exceeding £632,000; a balance sheet total not exceeding £316,000; and no more than 10 employees. Micro-entities can file a much simpler balance sheet at Companies House with no profit and loss account, meaning their revenues and profits remain private from public view. This is a significant advantage for small owner-managed businesses. The accounts also require minimal disclosures -- no notes beyond a basic creditors note are required. However, FRS 105 cannot be used by companies that are part of a group, public limited companies, financial services firms regulated by the FCA, or charities. Using micro-entity accounts reduces compliance costs and the time accountants spend on year-end preparation. Even if a company qualifies for micro-entity reporting, it must still file a full corporation tax return (CT600) with HMRC including a profit and loss account, so the tax position is unaffected.