FRS 105: The Essential Guide for Micro-Entities (Thresholds, Limits & Criteria)
Navigating UK financial reporting can feel like walking through a maze. If you run a very small company, you might have heard of FRS 105 – the Financial Reporting Standard designed specifically for micro-entities. But what exactly are the FRS 105 thresholds, and how do you know if your business qualifies?
In this comprehensive guide, we’ll break down the FRS 105 limits, eligibility criteria, how it stacks up against larger standards (including FRS 105 vs FRS 102), and where to find reliable FRS 105 model accounts.
What is FRS 105?
FRS 105 is a UK financial reporting standard issued by the Financial Reporting Council (FRC). It is the smallest reporting regime available under UK GAAP, tailored exclusively for micro-entities. The standard significantly reduces disclosure requirements compared to FRS 102 or full IFRS, allowing very small companies to file simpler, shorter accounts with Companies House using tools like QuickXBRL.
FRS 105 Thresholds, Limits & Criteria
To qualify for FRS 105, your company must meet at least two of the following three FRS 105 criteria for two consecutive financial years:
| Criteria | Threshold Amount |
|---|---|
| Balance sheet total (assets) | Not exceed £316,000 |
| Turnover (revenue) | Not exceed £632,000 |
| Average number of employees | Not exceed 10 |
These FRS 105 limits are strict. If you exceed two of the above FRS 105 thresholds for two consecutive years, you must move up to FRS 102 Section 1A (for small entities).
Important: FRS 105 Threshold for New Companies
For a new company in its first financial year, you can apply FRS 105 if you estimate your thresholds will be met. However, once your actual figures exceed the FRS 105 threshold, you’ll need to transition to a larger regime in the following year.
FRS 105 vs FRS 102: Key Differences
One of the most common questions is: FRS 105 vs FRS 102 – which one is right for you?
| Feature | FRS 105 | FRS 102 (Section 1A) |
|---|---|---|
| Profit & Loss | Abridged (No detailed breakdown) | More detailed |
| Director’s Report | Not required | Required |
| Related Party Trans. | Minimal disclosures | Full disclosure required |
| Balance Sheet Limit | £316,000 | £5,100,000 |
Benefits of Using FRS 105
- Less administrative burden – fewer notes and disclosures.
- Lower accounting costs – simpler to prepare.
- Privacy – abridged balance sheet means less financial data is public.
- Compliance – No director’s report required.
FRS 105 Model Accounts: A Practical Template
Preparing accounts from scratch is risky. That’s why many accountants use FRS 105 model accounts – template financial statements that comply with the standard. A compliant set typically includes a simple balance sheet, a brief profit and loss account, and a single accounting policies note.
QuickXBRL streamlines this by providing a digital "Model Account" experience where you simply enter your figures, and we generate the compliant iXBRL for you.