SimpleReturns

Am I a micro-entity? (the FRS 105 size test)

Updated 27 June 2026
The short answer

If your company is small, the answer is almost certainly yes. You count as a micro-entity when it hits at least two of these three in the year: money in of £1 million or less, a balance sheet total of £500,000 or less, and 10 employees or fewer. Those money limits are for an accounting year that started on or after 6 April 2025; if your year started before then the limits are a bit lower (£632,000 and £316,000). You don't have to work out which set applies to you, we do that from your figures and your dates. Being a micro-entity is good news, it means you file the simplest accounts there are, and that's exactly what we prepare for you. A few company types can't use it, like public limited companies and charities.

What is a micro-entity?

It's the name for the smallest kind of limited company. Most one-person and small companies are one. The label matters because it decides what your accounts look like: a micro-entity files the shortest, simplest set of figures there is, with far less detail than a big company has to hand over.

You don't have to work this out yourself. When you use SimpleReturns we look at your numbers and sort it for you. This page is just so you know what the word means when you see it.

The three limits

To be a micro-entity, your company has to hit at least two of these three in the year:

  • Money in (turnover): £1 million or less. This is everything your company earned from its work over the year.
  • Balance sheet total: £500,000 or less. This is what your company owns added up, things like cash, equipment and money owed to you, before taking off what it owes. It's not your profit and it's not your bank balance.
  • Staff: 10 people or fewer, counted as the average across the year.

Two out of three is the whole test. You can be over on one of them and still be a micro-entity, as long as you're inside the other two. For almost every small company, all three are comfortably met.

The £1 million and £500,000 money limits above are for an accounting year that started on or after 6 April 2025. If your year started before then, the limits are lower: £632,000 for money in and £316,000 for the balance sheet total (the staff limit of 10 is the same either way). It sounds fiddly, but you don't have to figure out which set applies to you, we read your year's dates and use the right limits for you.

Why does it matter to me?

Because being a micro-entity means less work and less to file. You get the simplest accounts going: a short summary of what your company owns and owes, plus a small set of notes. No long profit-and-loss to send to Companies House, no directors' report. That's the whole point, the rules keep things light for the smallest companies.

It's also exactly what SimpleReturns is built for. We read your year's money in and out, work out your figures, and produce micro-entity accounts and your Company Tax Return together.

Are there companies that can't be a micro-entity?

Yes. A handful of company types are shut out even if they're small enough on the numbers. The main ones are:

  • Public limited companies (a "plc").
  • Charities set up as companies.
  • Insurance and other finance-sector companies.
  • A few less common ones, like certain partnerships and overseas companies.

If you run an ordinary small private limited company, none of these apply to you and you're fine. If you're not sure, we'll flag it.

How do I know which one I am?

Good news: you don't need to. We work it out from your own figures, the money in, what your company owns, and how many people you employ, and we also look at your company's recent history, because the size band normally only changes after two years in a row over a limit. You'll see the result; you won't have to classify yourself.

How SimpleReturns handles it

Connect your bank or upload a statement, and we read your year's money in and out, work out which size band you're in from your figures and your dates, and prepare the right micro-entity accounts and your Company Tax Return together. You see every figure before anything is sent.

Common questions

Is being a micro-entity a good thing?

Yes. It means the lightest accounts and the least to file. It is the simplest band there is, and it is what most small companies fall into.

What counts as my "balance sheet total"?

It's the total of what your company owns, cash, equipment, money customers owe you, added up before you take off what the company owes. It isn't your profit or your bank balance. We work this figure out for you.

I went over £1 million in turnover this year. Am I still a micro-entity?

Possibly, yes. You only need to meet two of the three limits, so being over on turnover alone doesn't push you out if you're inside the balance-sheet and staff limits. And a size band usually only changes after two years in a row over a limit, not the first time. One more thing to know: the £1 million figure is for a year that started on or after 6 April 2025; if your year started before then the turnover limit is lower, £632,000. Don't worry about which one is yours, we work it out from your dates and your figures.

My company is brand new. Can it be a micro-entity?

Yes, a new company is judged on its first year's own figures. If it meets two of the three limits, it's a micro-entity from the start.

Can a charity or a plc be a micro-entity?

No. Public limited companies, charities and a few other types can't use the micro-entity rules even when their numbers are small. An ordinary private limited company can.

Ready to do it the easy way?

You don't need to know your company's size to start. We read your year's money in and out, work out which band you're in, and prepare the right accounts and your Company Tax Return together, for £99, once, no subscription. You see every figure before anything is sent.

Start your return →

Or, if your company is more complex, like a group, a charity or a plc, an accountant may be the better fit, and that's an honest call to make.

General guidance, not advice. This guide explains how the rules generally work for small UK limited companies. It isn't tax advice for your specific situation, if you're unsure, check with us or an accountant.