FRS 102 or FRS 105?

All entities - sole traders, companies and partnerships - must prepare financial statements according to Generally Accepted Accounting Practice (GAAP).

This helps entities to produce a true and fair view of their financial position and performance.

In the UK, the standard for general purpose financial statements available for use by entities of all sizes - micro, small, medium and large - is Financial Reporting Standard (FRS) 102.

A simplified version of this standard, FRS 105, is available for certain micro-entities.

What size business are you?

Entity size is determined by meeting at least two of three set criteria relating to turnover, balance sheet total and average number of employees.

Current thresholds are due to change from April 6, 2025:

	Micro	Small	Medium
Current thresholds
Turnover	<= £632k	<= £10.2M	<= £36M
Balance sheet total	<= £316k	<= £5.1M	<= £18M
Average employees	<= 10	<= 50	<= 250
From 06/05/25
Turnover	<= £1M	<= £15M	<= £54M
Balance sheet total	<= £500k	<= £7.5M	<= £27M
Average employees	<= 10	<= 50	<= 250

Why should I be interested?

The changes in thresholds will enable many more entities to benefit from FRS 105 and its simplified reporting standards.

More entities will also be considered small, potentially enabling them to apply exemptions to prevent them from requiring an audit.

Points to note:

Some entities are specifically excluded from being micro-entities due to their nature.

This document is a simplified helpsheet and careful research should be completed if you are unsure.

Need more information? Contact us today to find out more.

Verifiable Accounts - Professional Financial Accountants providing Tax Preparation and Accounting Services