What is FRS 105?
Definition of FRS 105
FRS 105 is a financial reporting standard that is available to companies in the UK that are ‘micro-entities’. Under FRS 105, HMRC allows these companies to keep a simpler set of accounts than those required of small, medium or large companies.
Micro-entities are companies that meet two or more of the following requirements:
- A turnover of £632,000 or less.
- £316,000 or less on the company’s balance sheet.
- 10 employees or fewer.
Businesses using FRS 105 must file the following with HMRC annually:
- An Income Statement (this is also sometimes known as a ‘Profit and Loss account’).
- A Balance Sheet (this is also sometimes known as a ‘Statement of Financial Position’)
- Footnotes explaining any company director transactions.
Companies using FRS 105 must also file their Balance Sheet and the footnotes explaining director transactions with Companies House.
FRS 105 in FreeAgent
Companies that meet HMRC’s definition of a micro-entity can use the Final Accounts report in FreeAgent to help prepare their accounts in order to submit them to both HMRC and to Companies House. The report is populated with data automatically based on the transactions that you enter throughout the year.