Knowing what belongs in the accounts before you start can make the year-end process much easier. It also reduces the risk of leaving out information that needs to be included in the statutory accounts.
Micro Entity Accounts are simplified statutory accounts designed for qualifying very small companies. They allow eligible businesses to prepare accounts using the micro-entity provisions and benefit from certain exemptions available to small companies.
For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least two of the three micro-entity size conditions: turnover of no more than £1 million, a balance sheet total of no more than £500,000, and an average of no more than 10 employees.
Eligibility is only the starting point, though. Once a company qualifies, the accounts still need to contain the required information and follow the appropriate accounting framework.
A micro-entity must prepare accounts containing several core components.
These include:
A balance sheet
A profit and loss account
Relevant notes or footnotes
An auditor’s report, where an audit is required
A qualifying company may claim audit exemption if it meets the relevant conditions. In that situation, an auditor’s report is not required.
The accounts must also be prepared in accordance with the applicable micro-entity provisions rather than simply presenting a basic list of income and expenses.
The balance sheet is one of the most important parts of Micro Entity Accounts. It provides a snapshot of the company’s financial position at the end of its financial year.
It records what the company owns, what it owes and the value attributable to the company.
Depending on the company’s circumstances, the balance sheet can include items such as:
Fixed assets
Current assets
Debtors
Cash at bank
Creditors
Accrued amounts
Share capital
Reserves
Other relevant balance sheet items
Micro-entity accounts can use a simplified balance sheet format. Companies House also provides online filing arrangements designed specifically for micro-entity accounts.
A profit and loss account records the company’s financial performance during the accounting period.
For the company’s own statutory accounts, a qualifying micro-entity still needs to prepare a profit and loss account in the required format.
However, there is an important distinction between preparing the accounts and filing them with Companies House.
Under the current rules, a micro-entity can generally file a balance sheet with less information at Companies House without delivering its profit and loss account. This is one of the main benefits of the simplified filing regime.
That position is due to change from 1 April 2028, when micro-entities will be required to deliver a profit and loss account to Companies House. Eligible companies will have an option to opt out of having that information published on the public register.
Notes are another important part of Micro Entity Accounts.
They provide additional information needed to understand the figures presented in the financial statements. The notes should contain the disclosures required by the applicable accounting rules and should be consistent with the figures in the accounts.
The amount and type of information required will depend on the company’s circumstances.
For example, particular transactions, accounting policies or financial information may require supporting disclosure. This is why simply copying figures from a bookkeeping system into a template is not always enough.
The balance sheet of a micro-entity must contain a specific statement confirming that the accounts have been prepared in accordance with the micro-entity provisions and delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The statement needs to appear prominently above the director’s signature and printed name. It should also be included in the original accounts, rather than only in the copy sent to Companies House.
This is a small detail, but it is easy to overlook when preparing accounts manually.
The balance sheet must be approved and signed by a director on behalf of the board.
The director’s printed name must also be shown.
These requirements are important when submitting accounts because Companies House can reject accounts that do not meet the required signing and presentation rules.
Before filing, check the final version rather than assuming that the accounting software has included every required detail.
A qualifying micro-entity benefits from certain exemptions available to small companies.
One important exemption is that it does not generally need to file a directors’ report with Companies House.
The same applies to the profit and loss account under the current filing rules. However, the accounts prepared for the company’s members still need to contain the information required by company law and the relevant accounting provisions.
This distinction between what the company must prepare and what it must deliver to Companies House is particularly important when dealing with simplified accounts.
Not every micro-entity needs an audit.
A qualifying micro-entity can claim audit exemption under the small-company rules if it meets the relevant requirements. If the company is entitled to the exemption and claims it correctly, an auditor’s report does not need to be included.
However, some companies are not eligible for audit exemption even if they appear small. There can also be circumstances where an audit is required.
Directors should therefore check the exemption conditions rather than assuming that every micro-entity is automatically exempt.
Good preparation starts with accurate financial records.
Before preparing Micro Entity Accounts, gather:
Bank statements
Sales records
Purchase invoices
Expense records
Payroll information
Fixed asset details
Debtor and creditor balances
Loan and finance information
Corporation Tax information
Details of dividends and director transactions
Previous year’s accounts
The exact records required will depend on the company and its activities.
If bookkeeping has been kept up to date throughout the year, preparing the accounts should be much more straightforward.
Once the accounts have been prepared and approved, the relevant information needs to be delivered to Companies House by the company’s filing deadline.
Companies House currently provides an online service for filing micro-entity accounts. To use the WebFiling service, you need the relevant account details and authentication code.
It is worth checking the filing information carefully before submitting it. A mistake in the company number, accounting period, balance sheet or other required information can cause unnecessary delays.
Another common mistake is treating Companies House filing and Corporation Tax filing as the same process.
They are separate obligations.
Your statutory accounts are used as part of the company’s tax reporting process, but the information submitted to HMRC and the information delivered to Companies House can have different requirements.
A company should therefore make sure it meets both sets of obligations and their respective deadlines.
The current filing rules are not permanent.
From 1 April 2028, micro-entities will have to deliver a profit and loss account to Companies House. The reforms will also require companies to use commercial software to file accounts with Companies House.
For small businesses, this makes it sensible to keep proper accounting records now rather than relying entirely on the minimum information currently required for public filing.
A well-organised bookkeeping system can make the transition easier when the new requirements come into effect.
Before filing, use this simple checklist:
Confirm that the company qualifies as a micro-entity.
Check the correct accounting period.
Prepare the balance sheet.
Prepare the profit and loss account.
Include the required notes.
Add the required micro-entity statement to the balance sheet.
Check the director’s printed name and signature.
Confirm whether audit exemption applies.
Review the accounts for errors and inconsistencies.
Check the Companies House filing deadline.
Deal separately with the company’s Corporation Tax requirements.
Keep a complete copy of the final accounts and supporting records.
This final review can catch simple omissions before the accounts are submitted.
If you want to explore more information about company accounts, accounting topics, UK business guidance and related resources, you can visit Micro Entity Accounts Resources for additional pages, articles and location-based information.
Having access to useful accounting information can make it easier to understand your responsibilities and prepare for important filing dates throughout the year.
Micro Entity Accounts are simpler than full accounts, but they still have specific requirements. A qualifying company must prepare the appropriate balance sheet, profit and loss account and notes, while also meeting the relevant signing, statement and audit requirements.
The key is to understand the difference between the accounts a company must prepare and the information it currently needs to deliver to Companies House.
With accurate bookkeeping, properly prepared accounts and a final compliance check, small companies can approach their annual filing with much greater confidence.
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