iXBRL Accounts Tagging Services for
WHAT ARE MICRO-ENTITIES?
Micro-entities are very small companies. Your company will be a micro-entity if it satisfies any 2 of the following criteria:
- a turnover of £632,000 or less
- £316,000 or less on its balance sheet
- 10 employees or less
These criteria must be met in two consecutive years after the first financial year for a business to be certified as a micro-entity. If any two conditions are surpassed, the micro-entity automatically will lose this status.
The following types of businesses are not included as micro-entities:
- Philanthropic businesses,
- Funding ventures;
- Finance companies;
- Ancillary businesses holding companies responsible for group accounts.
Any business that is removed from the list of small companies or LLPs need not follow FRS 105 standards.
ACCOUNTING STANDARD FOR PREPARATION OF ACCOUNTS OF A MICRO ENTITY
All micro-entities are required to follow the FRS 105 single accounting standard. It is based on ‘FRS 102 The Financial Reporting Standard followed in the UK and Republic of Ireland’, but it has been modified to help micro-entities with the statutory accounting requirements and suited to their business transactions. FRS 102 is applicable to accounting periods starting from or after 1 January 2016.
It consists of 28 sections, each dealing with different areas of accounting. FRS 105 requires that micro-entities prepare only an income and financial statement. The standard requires only declarations of a particular nature.
The implementation of this standard by businesses is voluntary. A business can meet the requirements but choose not to apply this and opt for other optional standards applicable to its functioning.
All small businesses are required to publish their:
- Income Statement (as a substitute for the Profit and Loss Account)
- Statement of Financial Position (alternative for the Balance Sheet)
Exhaustive notes are not required with these statements. Only general data is to be submitted about the owner’s financial transactions.
REQUIREMENTS FOR ACCOUNTS PREPARATION & FILING FOR MICRO-ENTITY
FRS 105 accounts are needed to be submitted to HMRC and Companies House every year as a requirement of every company’s annual accounts filing. While statements of income and financial position and general data about owner transactions are to be given to HMRC, Companies House only requires the documents of financial position and general data pertaining to transactions.
- Prepare simpler accounts that meet statutory minimum requirements
- Send only your balance sheet with less information to Companies House
- Benefit from the same exemptions available to small companies
- Send statutory accounts to your members and to HM Revenue and Customs (HMRC) as part of your Company Tax Return if you’re a small company or micro-entity.
We always suggest to seek professional advise prior to preparation of accounts and submission to Companies House, HMRC or Revenue Filings.