This guide explains the format for filing annual accounts with Companies House each year – specifically the FRS105 and FRS102 frameworks, which apply to small companies.
Thanks to Christian Hickmott, MD of Integro Accounting, for providing this useful advice.
What if you’re self-employed (a sole trader)?
Before we look into the reporting requirements for companies, let’s also mention freelancers who work as sole traders.
If you are freelancing as a sole trader or as a member of a partnership, you do not need to submit statutory accounts to Companies House.
As the individual and the business are treated as one legal entity, the main requirement is to report your income, expenses and profit to HMRC via your self assessment tax return.
You should still keep accurate records to support your figures.
Some accountants will offer you an accounts preparation service, but for most one-man-band businesses, this is an additional cost that doesn’t tend to add too much value.
What if you trade through a limited company?
If you work via a limited company, the directors must prepare accounts for submission to Companies House, using an appropriate reporting framework.
For small and micro businesses, two frameworks are used the most:
- FRS 105 – the reporting framework for micro entities
- FRS 102 Section 1A – the reporting framework available to small businesses
FRS 105
This reporting framework is only available to micro companies in the UK. These are companies that must meet two out of the following three criteria:
- Turnover below £1m p/a
- Net assets below £500,000
- Employee count below 10
This is the simplest set of accounts that can be submitted, and contains:
- Profit and loss account – not filed to Companies House
- Balance sheet
This is particularly useful if you want to prepare your accounts yourself, as it significantly simplifies the reporting requirements.
Many accountants prefer this framework, as it requires as little information to be submitted to the public record as possible.
FRS 102 Section 1A
FRS 102 is one of the main frameworks used for small and medium sized businesses in the UK.
Under Section 1A, however, small businesses can claim exemptions to reduce the number of disclosures required and avoid filing certain information, such as the profit and loss account, on the public record.
A small business meets two out of these three criteria:
- Turnover below £15m p/a
- Net assets below £7.5m
- Employee count below 50
Although a company using FRS 102 Section 1A can claim exemptions from certain reporting requirements, it still produces a more comprehensive set of accounts than FRS 105.
A set of FRS 102 Section 1A accounts will typically include:
- Director’s report – not filed to Companies House
- Accountant’s report – not filed with Companies House
- Profit and loss account – not filed to Companies House
- Balance sheet
- Various disclosures
- Detailed profit and loss account – not filed to Companies House
When using this framework, it is important to remember two things:
- Although exemptions apply, you may still choose to file certain disclosures
- You must ensure the accounts give a true and fair view of the company at the reporting date
This means there may be cases where a company applies some, but not all, of the available exemptions.
For example, some not-for-profit companies may wish to file their director’s report, as it can include information for stakeholders about how funds are being used.
In other cases, a small company may have its accounts audited and choose to publish the auditor’s report.
FRS 105 vs FRS 102 – what’s the difference?
| Feature | FRS 105 | FRS 102 Section 1A |
|---|---|---|
| Company size | Micro entity | Small company |
| Complexity | Very low | Moderate |
| Public disclosure | Minimal | More detailed |
| Typical contractor use | Very common | Less common |
Which framework do most contractors use?
Most contractor limited companies qualify as micro entities and therefore use FRS 105.
This keeps reporting simple and limits the amount of financial information placed on the public record.
FRS 102 Section 1A is more likely to be used where:
- The business is larger or growing quickly
- There are external stakeholders or lenders
- More detailed reporting is required
In summary…
You don’t need to submit accounts to Companies House if you’re a sole trader, but you must keep records to support your tax return.
If you run a limited company, you have a legal obligation to file accounts accurately and on time. See also our guide to company deadlines.
In addition to the Companies House filings explained here, the company must submit its full accounts to HMRC and pay any Corporation Tax due.
As a director, you must also file a personal self assessment return.
Although it is possible to prepare company accounts yourself, many compelling reasons exist to use an accountant.
You may also want to understand the structure of your accounts in more detail, including the balance sheet and profit and loss account.
Integro Accounting offers comprehensive packages for both limited companies and sole traders.
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