Small Company Accounts: FRS 105 vs FRS 102 Explained

When you file your company accounts, you need to choose which accounting standard to follow. For most small companies, that means picking between FRS 105 (micro-entity accounts) or FRS 102 (small company accounts).

The right choice can save you time, money, and paperwork. The wrong choice can mean unnecessary complexity and higher costs.

What are accounting standards?

Accounting standards are the rules that govern how you prepare and present your company accounts. Think of them like a recipe book — they tell you what information to include, how to format it, and what you can leave out.

In the UK, small companies typically use either:

• FRS 105 — for micro-entities (the smallest companies)
• FRS 102 — for larger small companies

FRS 105: Micro-entity accounts

FRS 105 is the simplest accounting standard. It's designed for the smallest companies that meet the micro-entity criteria.

Who can use FRS 105?

Your company qualifies as a micro-entity if it meets at least 2 of these 3 criteria:

For financial years beginning on or after 6 April 2025 (updated by the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024):

1. Annual turnover: £1,000,000 or less
2. Balance sheet total: £500,000 or less
3. Number of employees: 10 or fewer (average)

For financial years beginning before 6 April 2025, the previous (lower) thresholds applied: turnover ≤ £632,000 and balance sheet ≤ £316,000, with the employee count unchanged at 10.

Check which thresholds apply based on the start date of the accounting period you are preparing accounts for.

Most small companies easily meet these thresholds.

What's included in FRS 105 accounts?

Very little, which is the point:

Balance sheet

• Fixed assets (equipment, etc.)
• Current assets (cash, stock, debtors)
• Creditors and liabilities
• Share capital and reserves

Profit and loss account

• Turnover
• Gross profit or loss
• Administrative expenses
• Profit or loss before tax
• Tax
• Profit or loss for year

Notes to accounts

• Minimal notes required
• Accounting policies (brief)
• Few additional disclosures

What you DON'T need with FRS 105

• Cash flow statement
• Directors' report (in most cases)
• Detailed notes on accounting policies
• Extensive disclosure notes

Key differences at a glance

Which should you choose?

Choose FRS 105 if:

• You meet the micro-entity criteria (most small companies do)
• You want to minimize compliance costs
• Your accounts are straightforward
• You prefer less public disclosure
• You're filing your own accounts

Choose FRS 102 if:

• You don't meet micro-entity criteria
• You need more detailed reporting for stakeholders
• You're planning to apply for significant bank lending
• You have complex transactions requiring detailed explanation

For most small companies, FRS 105 accounts are usually the right choice. They're simpler, cheaper, and perfectly adequate for most small companies.

At Taxpipe, we automatically generate micro-entity (FRS 105) accounts in the correct iXBRL format as part of your £59 CT600 filing. For most companies, this is all you need.

Time spent wrestling with unnecessary accounting complexity is time not spent growing your business.

Related Articles

• iXBRL Tagging for Company Accounts and CT600
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File your CT600 with Taxpipe

If you're filing under FRS 105, Taxpipe generates your micro-entity iXBRL accounts automatically and submits them with your CT600 to HMRC — all for £59.

If you're preparing FRS 102 Section 1A accounts, you'll need to produce the iXBRL accounts in your accounting software and upload them to Taxpipe, which then packages and submits everything to HMRC.

File your CT600 now →

Related articles:

• How to File a CT600 Online: Step-by-Step Guide
• Corporation Tax Allowable Expenses — The Complete List
• Your First Company Tax Return — A New Director's Guide