Definition of a Micro-Entity for UK Accounting Purposes
Definition of a Micro-Entity for Accounting Purposes
What exactly is the definition of a micro-entity, as far as HMRC and accounting is concerned? Generally, a company falls under one of three size classifications when it comes to preparing accounts: Small, Medium, and Large (anything larger than a medium company). The company size will determine what information needs to be filed at Companies House (See Micro-entity Filed Accounts) However, the small company category also includes a sub-classification of micro entity accounts, referring to extremely small companies. Three things are taken into account when defining the category for any sized company;
Definition of a Micro-Entity
In order to be classified as a micro-entity, an organisation has to meet at least two of the following three conditions:
- Average number of employees must not exceed 10
- Balance sheet total must not exceed £316,000
- Turnover must not exceed £632,000
Additionally, there are several company types that are not allowed to submit accounts as a micro-entity. They include:
- Limited liability partnership (See Definition of a partnership for accounting purposes)
- Limited partnership
- Qualifying partnership as defined by the Partnership (Accounts) Regulations of 2008
- Public limited company
- Overseas company (See Definition of an Overseas Company and Registration requirements)
- Unregistered company
- Company that is authorised to register under section 1040 of the Companies Act of 2006
- Charitable company (See Definition of a Community Interest Company (CIC))
- Company that section 384 Companies Act of 2006, or that 284B Companies Act of 2006 excludes from the small company’s regime
What Micro-Entity Accounts Include
If a company achieves a micro-entity classification, they’re required to prepare accounts that contain the following elements:
- Balance sheet that complies with one of the specified formats that come outlined in the relevant regulations. This includes any footnotes.
- Director’s report
- Profit and loss account that complies with one of the specified formats that come outlined in the relevant regulations.
- Auditors report, unless the organisation claims exemption from an audit as a small company
- Notes to the accounts
Exemptions Available for Micro-Entities
Micro-entities are allowed to prepare and file balance sheets with a reduced set of information than the law requires for small, medium, or large organisations. Additionally, a micro-entity could potentially benefit from any exemptions available to small companies (See Audit Exemptions for Small Companies and Micro-Entities).
What a Micro-Entity Has to Deliver to Companies House
A micro-entity has to file a copy of their balance sheet annually with Companies House, the date of filing will be based on the when they first registered the company.
In summary, the definition of a Micro-Entity is:
- Average number of employees does not exceed 10
- Balance sheet total does not exceed £316,000
- Turnover does not exceed £632,000
Micro-Entities in DoordaBiz:
Doorda holds extensive historical data on millions of Companies which allows you to easily identify Micro-Entities and append additional information. These additional sources include Regulator Data so you can see if a company has been fined or issued a warning as well as listed directors and company charges via DoordaBiz.
You can also investigate addresses linked to a company via DoordaProperty including a properties business rates and regulatory inspection reports. All data is linked on company number so you can effortlessly see the structure, movements, and activities of a company on many levels.