What Are Micro Entity Accounts?

  • Written By : Kasra Dash
  • Time : 5 minutes

If you run a small business, you could be eligible for micro entity accounts. Filing micro-entity accounts saves many small businesses money and time. This article covers how a business can qualify as a micro-entity company, how micro-entity accounts are prepared, and where they are submitted to.

What are reduced micro-entity accounts?

Micro entity accounts are a type of accounting method that allows smaller companies to file smaller or reduced accounts. This, in turn, allows small businesses to file their own company tax return and accounts without the requirement for accounting knowledge. It’s an optional, smaller method of accounting; however, it has big benefits.

If your small business is eligible to file micro entity accounts, you can submit abridged accounts with a simpler balance sheet. It’s up to your discretion whether you’d like to supply a director’s report or a profit and loss account.

Who can file micro entity accounts?

There are some eligibility criteria that a business must meet to be granted micro entity status or a ‘very small company’ by the UK government’s standards. They are:

  • 10 employees or less per year on average
  • Under £632,000 turnover
  • The balance sheet must reflect £316,000 or less

Businesses registered as limited liability partnerships, not-for-profit organisations, a public limited company, or financial institutions (banks, lenders) will not be eligible to file abridged accounts. If your company is a parent company with group accounts, you won’t be eligible to use micro provisions. If this sounds like you, you may still be eligible for filing small business accounts. Contact our team below for assistance.

How to prepare micro entity accounts

Preparing micro entity accounts is a lot more straightforward than preparing typical, more detailed accounts. One thing remains the same; you’ll need to submit and file your annual accounts each year. As a micro entity, you can submit the following:

  • A simplified balance sheet that contains a director sign-off and statement confirming the sheet has been prepared to comply with micro entity requirements.
  • You can also supply an optional profit and loss account, which can be abridged to start at gross profit other than annual turnover.
  • The majority of micro entities are exempt from audits. However, you can submit an optional auditor report.
  • Micro entities can submit an optional directors report, similar to abridged accounts.

Micro entity provisions are optional but give qualifying companies the opportunity to save time and money on their accounts. The alternative is to file accounts under the small companies’ regime.

What are ‘filleted’ accounts?

Filleted accounts mean filing an even simpler version of micro entity accounts. If you’re a micro entity that files filleted accounts, you are only required to provide a confirmation statement and a balance sheet with director footnotes. The statement must confirm the accounts have been prepared with micro entity provisions in mind. Companies choose to submit filleted accounts if they want to reduce their public record.

How to complete micro entity accounts

Companies House’s online filing service is the preferred way for small companies to complete their micro entity accounts. To do this, you’ll need your Government Gateway login credentials and the authentication code given by Companies House.

As a micro entity, you also have the added bonus of utilising the government’s Company Accounts and Tax Online (CATO) online service, which allows you to submit your micro entity accounts to HMRC and Companies House simultaneously. You’ll need your government gateway details and company authentication code to do this. You can get your company authentication code from Companies House.

It’s worth noting that if you can prepare micro entity accounts earlier, you can submit them by post.

Micro entity accounts software

While micro entity accounts are simpler to produce, and you can do so manually, hiring an experienced accountant can handle it for you. An accountant can help you ensure you file your accounts to comply with either micro entity provisions applicable or the small companies regime if you’d like to include information outside of what Micro Entity accounts provide.

You may also want to use accounting software to save time and ensure you complete all the relevant steps appropriately. You’ll also be preparing for the 2026 Making Tax Digital (MTD) legislation that’s coming into effect.

What are the benefits of filing micro entity accounts?

Filing micro entities’ accounts have quite a few benefits, but the three main advantages are as below:

  1. Filing micro entity accounts is simpler, leaving less room for mistakes.
  2. Micro entity accounts don’t take as much time as full accounts.
  3. If you file micro entity accounts yourself, you can save money on accounting costs.

It’s worth being aware of the risks of filing micro entity accounts yourself. While simpler than full accounts, a few hoops need to be jumped through to get them right.

Are there any downsides?

Filing your accounts as a micro entity can hold you back from funding through venture capital companies and angel investors. Funders may be deterred by the fact there isn’t much public record of your companies.


Ready to file micro-entity accounts?

The team of chartered accountants at TaxBite can help you figure out if filing via the micro entities regime is right for you and ensure your micro-entity accounts are fully compliant with HMRC.

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