Micro-Entity vs Small Company Accounts

When your company files accounts with Companies House, those accounts must follow one of two reporting frameworks: FRS 105 (micro-entity) or FRS 102 Section 1A (small company). This guide explains the difference and how TinyTax decides which format to use.

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What Are Micro-Entity Accounts (FRS 105)?

FRS 105 is the simplest accounting standard available to UK companies. It is designed for the smallest companies and produces a stripped-back set of accounts with minimal disclosure.

Key characteristics:

• Simplified balance sheet with fewer line items
• Abbreviated profit and loss account showing turnover and a single expenses line
• Auto-generated notes only — accounting policies, basis of preparation, and employee information
• No directors' report required

Micro-entity accounts are intentionally brief. The legal framework limits what can be included, so there is no option to add extra detail.

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What Are Small Company Accounts (FRS 102 Section 1A)?

FRS 102 Section 1A is the next step up. It is still an abbreviated format — far shorter than full statutory accounts — but it includes richer disclosures and more detailed financial statements.

Key characteristics:

• More detailed balance sheet with additional line items for fixed assets, debtors, and creditors
• Full profit and loss account showing turnover, cost of sales, gross profit, and administrative expenses
• Additional notes covering fixed asset movements, debtor and creditor breakdowns, and accounting policies
• No directors' report required (small companies can claim exemption)

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Qualification Thresholds

Your company qualifies for a format if it meets at least 2 of the 3 criteria below.

Periods starting before 6 April 2025

Criterion	Micro-entity (FRS 105)	Small company (FRS 102 Section 1A)
Turnover	Up to £632,000	Up to £10.2 million
Balance sheet total	Up to £316,000	Up to £5.1 million
Employees	Up to 10	Up to 50

Periods starting on or after 6 April 2025

Criterion	Micro-entity (FRS 105)	Small company (FRS 102 Section 1A)
Turnover	Up to £1,000,000	Up to £15,000,000
Balance sheet total	Up to £500,000	Up to £7,500,000
Employees	Up to 10	Up to 50

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How TinyTax Detects Your Format

You do not need to select a format. TinyTax checks your filed figures — turnover, balance sheet total, and number of employees — against the thresholds above and generates the correct accounts automatically.

• If you meet 2 of the 3 micro-entity criteria, you get FRS 105 micro-entity accounts
• If you exceed micro-entity limits but meet 2 of the 3 small company criteria, you get FRS 102 Section 1A small company accounts
• If you exceed small company limits, accounts generation is not supported — you will need full accounts software

For established companies (not first-year filings), eligibility is checked against both the current year and the prior year figures.

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Key Differences at a Glance

Feature	Micro-entity (FRS 105)	Small company (FRS 102 Section 1A)
Profit and loss	Abbreviated — turnover and single expenses line	Detailed — turnover, cost of sales, gross profit, admin expenses
Balance sheet	Simplified format	Expanded with additional line items
Fixed asset note	Not included	Included — shows cost, depreciation, and net book value
Debtor/creditor breakdown	Not included	Included — shows amounts owed and owing
Accounting policies note	Auto-generated	Auto-generated with additional detail
Custom notes	Not permitted	Additional disclosures included
Directors' report	Not required	Not required (small company exemption)

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Why Can't I Add Custom Notes to Micro-Entity Accounts?

This is a common question. Under FRS 105, the notes to the accounts are prescribed by law. Companies filing micro-entity accounts are not permitted to include additional voluntary disclosures. The notes are limited to:

• Basis of preparation
• Accounting policies
• Guarantees and financial commitments (if applicable)
• Advances and credits granted to directors (if applicable)
• Average number of employees

This is a legal restriction under the Companies Act 2006 and FRS 105, not a limitation of TinyTax. If you need to include additional notes — for example, to satisfy a bank or investor — you should file as a small company instead (see below).

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Can I Choose to File as a Small Company Even If I Qualify as Micro?

Yes. If your company meets the micro-entity thresholds but you want more detailed accounts, you can file under FRS 102 Section 1A instead. There are valid reasons to do this:

• Bank lending — lenders may require more detailed accounts with debtor/creditor breakdowns
• Investor requirements — investors may want to see a full profit and loss account
• Voluntary disclosure — you may want to include additional notes for transparency

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Does This Affect My CT600?

No. The accounts format (FRS 105 vs FRS 102 Section 1A) only affects the accounts document filed with Companies House. Your CT600 corporation tax return to HMRC is completely unaffected — the same tax calculation applies regardless of which accounts format is used.

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Common Questions

Q: How do I know which format TinyTax has generated? A: When you preview your accounts, the document header will state the reporting framework — either "FRS 105" or "FRS 102 Section 1A". The preview page also indicates the format.

Q: My turnover exceeds the micro-entity limit but my balance sheet is small — which format do I get? A: You need to meet at least 2 of the 3 criteria. If only your turnover exceeds the micro-entity limit but your balance sheet total and employee count are within micro-entity limits, you still qualify as a micro-entity.

Q: What if my company exceeds the small company thresholds? A: You can still file your CT600 with TinyTax. However, you will need separate accounts software for your Companies House filing, as TinyTax only generates micro-entity and small company accounts.

Q: Do the thresholds apply to the current year or the prior year? A: For first-year filings, only the current year is checked. For established companies, both the current year and the prior year must meet the thresholds.

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Still Have Questions?

Not sure which format applies to your company? Get in touch and we will help.

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Last updated: February 2026