How to Read Micro Company Accounts in the UK?

If you have just received or pulled up a set of micro company accounts and are not sure what you are looking at, you are not alone. Most small business owners find these documents confusing at first glance — but the good news is that micro accounts are actually the simplest type of financial report that exists in the UK. Once you know what each section means and where to look, reading them takes no more than a few minutes. This guide walks you through every part of a set of micro company accounts in plain English, so you can understand your own numbers — or check the accounts of another business — without needing an accounting qualification.

What are Micro Company Accounts?

Micro company accounts are a stripped-down version of the financial statements that small limited companies must file every year with Companies House. They exist to reduce the paperwork burden on the UK’s smallest businesses.

Under the Companies Act 2006, a company qualifies as a micro-entity if it meets at least two of the following three conditions for two consecutive financial years:

• Annual turnover of no more than £1,000,000
• Balance sheet total (the total value of assets) of no more than £500,000
• The average number of employees is no more than 10

(These updated thresholds apply to accounting periods starting on or after 6 April 2025. Previous thresholds were £632,000 turnover and £316,000 balance sheet.)

If your company meets those conditions, you are allowed to prepare accounts under a financial reporting standard called FRS 105 — the Financial Reporting Standard applicable to the Micro-entities Regime. This standard lets you file a much shorter and simpler document than larger companies have to produce.

What Makes Micro Accounts Different from Regular Accounts?

The biggest difference is what micro accounts leave out. Unlike full statutory accounts or even small company accounts, micro company accounts under FRS 105:

• Do not require a profit and loss account to be filed publicly at Companies House
• Do not require a directors’ report
• Have very few notes — only the minimum required by law
• Show far fewer line items on the balance sheet

This means that if you are reading someone else’s micro accounts on Companies House, the information available is limited by design. You will mostly be looking at a balance sheet and a small number of notes.

Who Needs to Read Micro Company Accounts?

You might need to read micro company accounts if you are:

• A director wanting to understand their own company’s financial position
• A business owner checking the accounts of a supplier, customer, or potential partner
• A sole trader who has recently formed a limited company and is getting to grips with compliance
• A self-employed person transitioning to a limited company structure

Whatever your reason, the same rules apply — and once you know them, the documents make a lot more sense.

Where Can You Find Micro Company Accounts?

Before you can read them, you need to know where to find them.

How Do You Access Your Own Company’s Accounts?

Your accountant will usually prepare your micro company accounts and file them with Companies House on your behalf. You should always ask for a copy of the filed accounts for your own records. You can also log in to Companies House WebFiling to view previously submitted documents.

How Do You Find Another Company’s Micro Accounts?

All limited company accounts filed with Companies House are publicly available. To find them, go to find-and-update.company-information.service.gov.uk, search for the company name or number, and click on “Filing history.” The most recent set of accounts will be listed there as a PDF or an inline document.

What are the Main Sections of Micro Company Accounts?

A standard set of micro company accounts contains the following sections:

1. Company information page
2. Balance sheet
3. Notes to the accounts

That is it. There is no profit and loss account filed with Companies House (though one must be prepared internally and submitted to HMRC as part of your Corporation Tax Return — more on this below).

Let’s look at each section in detail.

How Do You Read the Company Information Page?

The first page of the accounts confirms the basic details of the company. You will see:

• Company name and registered number — check these match what you expect
• Registered office address
• Accounting period — the start and end date of the financial year these accounts cover
• Date the accounts were approved — this is the date the director signed off on the figures
• Name of the director who approved the accounts

Nothing complicated here — this is just a header page confirming who filed what and for which period.

How Do You Read the Balance Sheet in Micro Company Accounts?

The balance sheet is the heart of micro company accounts. It is a snapshot of the company’s financial position on the last day of the accounting period. Think of it as a photograph of what the business owns and what it owes on that one specific date.

The balance sheet is split into two sides that must always equal each other:

Assets (what the company owns) = Liabilities (what the company owes) + Capital and Reserves (the owners’ stake)

Here is how each section works:

What are Fixed Assets?

Fixed assets are things the company owns and uses over the long term — usually for more than a year. Examples include:

• Office equipment or computers
• Machinery or vehicles
• Business premises (if owned)
• Intangible assets like goodwill or trademarks

Under FRS 105, fixed assets must be recorded at their original purchase price, minus any depreciation. Depreciation is simply the reduction in value of an asset over time. So if you bought a van for £10,000 and it has depreciated by £3,000, it will appear on the balance sheet at £7,000.

Important: FRS 105 does not allow you to revalue fixed assets upwards even if they have gone up in market value. Everything stays at cost minus depreciation.

What are Current Assets?

Current assets are short-term assets — things the company expects to convert into cash within twelve months. These usually include:

• Stock (or inventory): Goods bought or produced that have not yet been sold
• Debtors: Money owed to the company by customers for work already done or goods already delivered. This is sometimes called “accounts receivable.”
• Prepayments: Costs you have paid in advance, such as insurance paid for the next year
• Cash at bank and in hand: The actual cash balance in your business bank accounts

The total of all these items gives you the current assets figure.

What are Creditors: Amounts Falling Due Within One Year?

This is the money the company owes to others that must be paid within the next twelve months. Common items include:

• Unpaid invoices from suppliers (trade creditors)
• VAT owed to HMRC
• Corporation Tax payable
• PAYE and National Insurance due
• Short-term bank loans or overdrafts
• Director’s loan accounts where the company owes money to the director

What are Creditors: Amounts Falling Due After More Than One Year?

These are longer-term debts — anything the company does not need to pay back within twelve months. Examples include:

• Long-term bank loans
• Finance leases running beyond a year
• Any deferred payments agreed with suppliers

What is Net Assets (or Net Liabilities)?

This is the key figure on the balance sheet. It is calculated as:

Total Assets − Total Liabilities = Net Assets

A positive net assets figure means the company owns more than it owes. This is generally a healthy sign.

A negative net assets figure means the company’s liabilities exceed its assets. This is sometimes called “balance sheet insolvency” and can be a warning sign, though it does not automatically mean the company is in trouble — it depends on cash flow and trading activity.

What is the Capital and Reserves Section?

This section shows the owners’ equity in the company — in other words, what belongs to the shareholders after all debts are settled. It typically includes:

• Called-up share capital: The value of shares issued to shareholders (often just £1 for a small company with one share)
• Profit and loss account / retained earnings: The cumulative profits the company has built up over time and not paid out as dividends. If the company has made losses, this figure will be negative.

The total of capital and reserves will always equal the net assets figure — this is what “balancing” the balance sheet means.

How Do You Read the Notes to the Accounts?

The notes section sits below the balance sheet and provides a small amount of additional detail required by law. For micro company accounts, the notes are very brief. You will typically see:

Basis of Preparation

This confirms the accounting standard used — it will say something like “These accounts have been prepared in accordance with the micro-entity provisions and FRS 105.” This tells you the company is using the simplified reporting framework.

Director’s Loans

If any director has received a loan from the company or has lent money to the company, the accounts must disclose this. It will show the amount outstanding and any interest charged.

If the director owes money to the company (a director’s loan account), this is a common area HMRC looks at closely — because if the loan is not repaid within nine months of the company’s year-end, Corporation Tax at 33.75% becomes due on the outstanding amount under Section 455 of the Corporation Tax Act 2010.

Financial Commitments and Guarantees

If the company has committed to any significant financial arrangement not already shown on the balance sheet — such as a lease, a personal guarantee, or a contingent liability — this must be noted here.

The Director’s Statement

At the bottom of the balance sheet, the director must sign a declaration that the accounts have been prepared in accordance with the micro-entity provisions and give a true and fair view. This signature makes the director personally responsible for the accuracy of what is filed.

What Doesn’t Appear in Micro Company Accounts Filed at Companies House?

This is just as important to understand as what does appear. The following are not included in what is publicly visible on Companies House for a micro company:

• Profit and loss account — you cannot see the company’s income, expenses, or profit from the public filing
• Directors’ report — no requirement for micro-entities
• Auditor’s report — micro-entities are exempt from audit (unless specifically required by shareholders)
• Detailed breakdowns of fixed assets, debtors, or creditors

This limited disclosure is deliberate. The law allows micro companies to keep their revenue and profitability private. However, HMRC does receive full accounts — including a profit and loss account — as part of the Corporation Tax Return.

What is the Difference Between Filing with Companies House and Filing with HMRC?

This confuses many small business owners, so it is worth being clear.

Companies House filing: You file an abbreviated balance sheet and notes only (micro company accounts under FRS 105). This is publicly visible.

HMRC filing: As part of your Corporation Tax Return (CT600), you must send HMRC a full set of accounts, including the profit and loss account. This is not public.

The deadline for Companies House is 9 months after your company’s financial year-end. The deadline for your Corporation Tax Return with HMRC is 12 months after your financial year end, with the Corporation Tax itself due 9 months and 1 day after year end.

If you miss either deadline, penalties apply automatically. Companies House penalties start at £150 for filing up to one month late and rise to £1,500 for filing more than six months late — and double if you miss the deadline in two consecutive years.

How Do You Use Micro Accounts to Check a Company’s Financial Health?

Even with limited information, you can draw some useful conclusions from a micro company’s balance sheet.

What Do Positive Net Assets Tell You?

If a company has positive net assets, its assets outweigh its liabilities. This suggests the business is financially stable, at least on the date the accounts were prepared. The larger the positive figure relative to the size of the business, the stronger the balance sheet.

What Do Negative Net Assets Mean?

A negative net assets position does not always mean the company is failing — a young company that has borrowed to invest in growth may have a temporarily negative balance sheet. However, it is a flag worth investigating further, especially if you are considering extending credit to that business or entering into a significant contract with them.

What Can Retained Profits Tell You?

If the profit and loss reserve (within capital and reserves) has grown year on year, the company is accumulating retained profits — a positive sign. If it is falling each year, the company is either paying out dividends or making losses, or both.

How Do You Compare One Year to Another?

Micro company accounts always show two years of figures side by side — the current year and the previous year. This comparative column is valuable. Look for big movements in:

• Debtors are increasing significantly (could mean slow-paying customers)
• Creditors are increasing significantly (which could mean the company is struggling to pay its own suppliers)
• Net assets declining year on year (could indicate ongoing losses)
• Cash at bank falling (always worth noting alongside other trends)

What are the Common Mistakes Business Owners Make When Reading Micro Accounts?

Assuming the Balance Sheet Reflects Profitability

The balance sheet tells you the company’s financial position at one point in time. It does not tell you whether the company was profitable that year. You cannot see turnover or profit from the Companies House filing for a micro company.

Ignoring the Director’s Loan Account

Many small company directors overlook their loan accounts. If the company has been paying personal expenses through the business bank account without proper record-keeping, these may show up as a debit balance on the director’s loan account, which carries a potential tax charge and must be repaid.

Not Comparing Year-on-Year

A single year of micro accounts gives you limited information. Always ask for or look at at least two to three years to spot trends.

Forgetting That Micro Accounts are Not the Full Picture

What is filed at Companies House is a summary. Your accountant should always provide you with the full management accounts and the Corporation Tax Return so you understand the complete financial picture of your business.

Do You Have to File Micro Company Accounts, or Can You File Small Company Accounts Instead?

Choosing to use the micro-entity regime under FRS 105 is optional. If your company qualifies as a micro-entity but you prefer to prepare accounts under FRS 102 Section 1A (the small company standard), you are free to do so. Some directors prefer the fuller disclosure of FRS 102 because it provides more useful management information.

However, if you choose to file as a micro-entity, you must use FRS 105 — you cannot mix and match.

Should You Hire an Accountant to Help With Micro Company Accounts?

Legally, you are not required to hire an accountant to prepare and file micro company accounts. There is no audit requirement for micro-entities, and the format is simple enough that many directors attempt to prepare them using accounting software.

However, there are very good reasons to use a qualified accountant:

• Accuracy: Errors in filed accounts are on public record and cannot be easily corrected
• Tax efficiency: An accountant prepares both the Companies House filing and the full Corporation Tax Return, making sure the two are consistent and HMRC-compliant
• Director’s loan management: Getting this wrong can result in an unexpected tax bill
• Deadlines: Missing Companies House or HMRC deadlines result in automatic penalties
• Peace of mind: You can focus on running your business

If your company is growing and approaching the micro-entity thresholds, it is especially important to have professional guidance — because once you cross those thresholds in two consecutive years, your reporting requirements change significantly.

Quick Reference: Micro Entity Thresholds (From 6 April 2025)

Your company must meet at least 2 out of 3 of these conditions for two consecutive financial years to qualify.

Quick Reference: Micro Accounts Filing Deadlines

Need Help With Your Company Accounts?

Reading micro company accounts is a skill that becomes straightforward once you understand the structure. But preparing them accurately — and making sure your Corporation Tax Return aligns with what has been filed at Companies House — is something best handled by a qualified accountant.

At Right Choice Consulting, we work with small business owners, sole traders, contractors, and limited company directors across the UK. Whether you need someone to prepare and file your micro company accounts, help you understand your current financial position, or take over your bookkeeping and tax compliance entirely, we are here to help.