Micro-entity accounts: all you need to know
Learn about when you are allowed to file micro-entity accounts, and the pros and cons of doing so.
A micro-entity (also called micro company) is the name for a very small, private limited company.
If you’re the director of a micro-entity, you can save time on preparing and filing your accounts by submitting micro-entity accounts with Companies House.
Micro-entity accounts are a simplified format containing all the information that’s required in all statutory accounts. However, they’re not always the best option to choose.
A micro-entity is a small private limited company meeting specific financial and employee criteria.
Micro-entity accounts simplify reporting, saving time and reducing public financial disclosure.
Limited financial detail may hinder investment or loan opportunities for business growth.
Using an accountant ensures compliance with FRS 105 and simplifies the filing process.
What are micro-entity accounts?
Micro-entity accounts are a simplified version of small company accounts. They mean you have to declare less online, which can be great if you want to maintain your privacy.
Please note that from 1 April 2027, small companies and micro-entities will have increased reporting requirements. They will no longer be able to prepare and submit abridged accounts.
Although all companies are required to submit a Company Tax Return to HMRC, small companies have options when it comes to their statutory accounts.
The Companies Act 2006 classifies a limited company as a micro-entity if it meets two of the three conditions during the financial year in question.
A company must not have more than one of the following:
An annual turnover below £1 million
£500,000 or less on their balance sheet
10 employees or less
| Max annual turnover | Max balance sheet | Max average employees | |
|---|---|---|---|
| Micro-entity | Up to £1 million | Up to £500,000 | 10 or fewer |
| Small company | Up to £15 million | Up to £7.5 million | 50 or fewer |
Thanks to The Small Companies (Micro Entities’ Accounts) Regulations 2013, micro companies are exempt from some of the financial reporting requirements when preparing their year-end Companies Act accounts.
Some businesses cannot apply the exemptions of the micro-entities regime, including:
Not-for-profits
Public limited companies
Limited liability partnerships (LLPs)
Investment undertakings (which look after a collective pool of investor assets)
Financial institutions (such as banks)
Subsidiaries of larger parent companies that are accounted for in the group’s accounts
This new micro-entity regime was introduced to make sure that the smallest companies in the UK weren’t subject to the same time-consuming requirements as large companies.
Should I file micro company accounts?
There are benefits and drawbacks to filing micro-entity accounts.
On one hand, you will save time and stress if you choose to file micro-entity accounts, as you won’t need to include documents such as a director’s report.
If your limited company is just you and a staff member or two, it’s likely you don’t have shareholders who need to be kept updated about your performance.
Your year-end accounts may simply be a compliance hurdle that you’d like to get out of the way as quickly as possible.
You may also choose to file ‘filleted’ (reduced) accounts with Companies House, which can reduce how much information is publicly available about your company’s performance.
This can stop competitors getting information about your financial situation or simply keep your information private.
However, if you’re actively seeking new shareholder buy-in or funding that will allow your company to grow, micro-entity accounts may hold you back.
Without an in-depth financial picture of your operations, you could find it harder to secure further investment or loans that make expansion possible.
Here's a quick summary of the pros and cons of filing a micro entity account:
| Pros | Cons |
|---|---|
| Saves time and admin | Less transparency for potential investors |
| Fewer documents required | May hinder funding or loan applications |
| Keeps financial details private | Not suitable for companies seeking rapid growth |
How do I prepare micro-entity accounts?
If you’d like to prepare micro-entity accounts, you’ll need:
A condensed profit & loss account complying with FRS 105 micro-entity standard (starting from gross profit rather than turnover)
A condensed balance sheet complying with FRS 105 micro-entity standard (requires a limited number of high-level figures)
An auditor’s report (unless you choose to claim the Small Companies audit exemption)
Here are the main differences between accounts for micro entities and small companies:
| Document type | Micro-entities | Small companies |
|---|---|---|
| Director’s report | Exempt | Required for shareholders, although can be reduced (filleted) before filing |
| Profit & loss | Required for shareholders | Required for shareholders |
| Balance sheet | Condensed format | Abridged format |
| Notes to accounts | Minimal disclosures | Full accounting notes |
Many micro-entities are also exempt from being audited, so you will not need to file an auditor’s report.
You can also choose to reduce (fillet) your accounts for the public record to reduce how much information is publicly available.
In this case, you’ll only need to file a balance sheet with footnotes.
Make sure you accompany it with a statement that the profit and loss account hasn’t been filed, and that your annual accounts have been delivered in accordance with the Small Companies’ regime.
Even if you do file micro-entity accounts, it’s important that you privately provide as much information as you can to your company’s members and shareholders.
They have invested time and or money into your business and have a right to know how it is performing.
How do I file micro-entity accounts?
Micro companies have various options for filing their micro-entity accounts, including the online Companies House WebFiling service.
Micro-entities must use HMRC-approved software, like TaxCalc, Freeagent or Xero, to file their Corporation tax returns.
The free CATO service closed permanently in March 2026.
Although you can still technically file your accounts on paper, it’s not advisable. Relying on the post office could mean you miss crucial deadlines and end up with a late-filing fine.
Should I use an accountant to file micro company accounts?
Filing micro-entity accounts can be complex, as you’ll need to make sure your accounts meet the FRS 105 Financial Reporting Standard.
Even if you’re familiar with preparing a profit and loss account and balance sheet, you might not understand what’s required in the abridged versions.
To make sure you stay compliant, and to save you a lot of time and hassle, it’s best to use an accountant to file micro company accounts.
There are two ways to find an accountant on Unbiased.
The first way is to use our match tool. Give as much details as you can about what you need, and our system will match you with the nearest accountant that’s right for you.
The second way is to use our search tool. Enter your postcode to see a list of accountants nearby. You can then refine your search, if you want to find an accountant with specialist expertise.
How much does it cost to get an accountant for micro company accounts?
Most accountants’ fees are determined by the size of your company, as well as other factors like location and the complexity of your accounts, meaning costs for a micro company will be at the lower end of the scale.
If your turnover is between £20,000 and £300,000, you should expect to pay between at least £800 if you’d like an accountant to do your accounts. A full set of limited company accounts (including the mandatory corporate tax filings) typically averages between £800 and £2,000 plus VAT per year.
It’s important to note these figures are guidelines – you’ll need to speak to accountants in your areas to get a sense of how much your accounts will cost. Find out more about what accountants cost.
Get expert accounting advice
Filing micro-entity accounts can save time and reduce admin, but it isn’t always the best option if you’re looking to raise investment or demonstrate financial transparency.
A professional accountant can make sure your accounts comply, while also advising on whether micro-entity reporting is right for your business’s long-term goals.
Unbiased can quickly match you with a qualified accountant who can make your tax obligations easier to manage.
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