Definition of a Micro-Entity for UK Accounting Purposes

Clifford McDowell

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

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:

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.

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