Small businesses can avail from FRS 105 which allows small companies in United Kingdom to report less detailed accounts. FRS 105 is a ‘Financial Reporting Standard’ issued by the ‘Financial Reporting Council’. It applies to accounting periods beginning on or after 1 January 2016.
Criteria for Micro-Entity
A company fulfilling two or more of the following qualifies as a micro entity
- Turnover of less than £632,000 (this is adjusted if the financial year is longer or shorter than twelve months)
- Balance sheet total is no more than £316,000 (Fixed Assets + Current Assets)
- Number of employees are less than 10
Reporting Requirements
Small businesses need to publish following financial statements under FRS 105
- Income Statement
- Statement of Financial Position
- There is no need to provide detailed notes with these statements
- You just need to provide some basic information regarding transactions with company directors
Submission to HMRC and Companies House
The accounts will need to be filed to HMRC and Companies house every year under FRS105.
HMRC requires submission of Statement of Financial Position, Income Statement, and footnotes showing any director transactions.
Companies House requires submission of 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.
Circumstances when a micro-entity cannot apply FRS105
A micro entity cannot use FRS105 in the event where a third party has an interest in the company’s financial affairs and annual accounts, as accounts prepared under FRS 105 may not provide the level of detail that the third party requires.
In such situations, accounts should be prepared using FRS 102 as it requires more detailed information to be published in the accounts.
The above is just guidance and nothing beats getting expert advice. If you need help with small business accounting, you might benefit from a comprehensive accountancy service like ours, get in touch with us today at info@accountingassist.co.uk , www.accountingassist.co.uk
