Micro-entity accounts explained

A company qualifies as a micro-entity for a financial year if it meets at least two of these three conditions (thresholds for financial years beginning on or after 6 April 2025):

• Turnover: £1 million or less
• Balance sheet total: £500,000 or less
• Employees: an average of 10 or fewer

Generally a company must meet the test two years running to change category (the first financial year counts on its own for new companies). A typical contractor, consultant or freelancer company with one director and turnover well under the limit qualifies easily.

Micro accounts are prepared under FRS 105, which cuts the requirements to the bone:

• A highly abridged balance sheet with two footnotes
• A simple profit and loss account (for the members and HMRC)
• No directors’ report, no detailed notes, and assets shown at cost (no revaluations, no deferred tax)
• The accounts are presumed by law to give a true and fair view if they follow the required minimum — a legal safe harbour unique to micro-entities

At Companies House, a micro-entity can currently file just the balance sheet and footnotes, keeping turnover and profit off the public record.

The micro regime is optional. Fuller small-company accounts under FRS 102 Section 1A can make sense where lenders want detail, the company holds property better shown at fair value, or investors expect conventional accounts. For most owner-managed service companies, though, micro accounts do everything needed at the lowest preparation cost — and we’ll tell you if you’re the exception.

What full statutory accounts include →

Being micro changes the format, not the obligations: accounts are still due 9 months after year end, a CT600 still goes to HMRC, and late filing penalties from £150 to £1,500 apply as normal. We prepare FRS 105 accounts and the Corporation Tax return together — call 0114 327 1480.

Micro company accounts service →