FRs105; when really is an entity micro?

FRs105; when really is an entity micro?

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Hi all. I have a client who has jsut started up. They have a business plan with revenue of £139k year ended March 17, and £752k year ended March 18. Obviously these are just targets and not actual reported numbers. FRS105 says "An entity must meet at least two of these limits in two consecutive years to qualify as a micro-entity; T/o <=£632k, B/S <=£316k, employees <=10".

As the company has not traded for two years and proven the above can it be a micro entity, especially as it expectes to exceed the t/o limit in year 2?

Thanks

Replies (7)

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Teignmouth
By Paul Scholes
29th Jun 2016 11:42

You go on actual results not estimates and, as far as the 2 year rule is concerned, you missed the "other than a newly incorporated company"

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RLI
By lionofludesch
29th Jun 2016 21:59

You'll have to wait and see, as Paul says,

You can't decide yet.

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Replying to lionofludesch:
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By sigcima
29th Jun 2016 22:23

Well, looking at the (well hidden) note on legal requirements in the FRS105 (on page 118!) it says "For any company, other than a newly incorporated company, to qualify as a micro-
entity, the qualifying conditions must be met for two consecutive years. " I took this to mean that a newly incorporated company doesn't have to meet the 2 years rule, rather it is micro by virtue that it has not traded and if at least in the first years in under the thresholds then should meet the requirements. No?

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By User deleted
30th Jun 2016 06:49

What's the problem?
CA/06 -384A (1) A company qualifies as a micro-entity in relation to its first financial year if the qualifying conditions are met in that year.

You have 9 months after the accounting year is over to look back and prepare the stat accounts, when you could decide whether the company is micro, small, medium, large or extra large.

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RLI
By lionofludesch
30th Jun 2016 09:07

You don't need to know - or even care - whether it's a micro company until you do the accounts.

Why are you asking now ?

Just chill and leave the question on the shelf for a year.

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By TerryD
01st Jul 2016 15:05

I suppose it could be good to plan ahead so that you have all the comparative figures ready if the accounting format should change.

However, read s. 384A(3). You have to exceed the limits for two consecutive years. So if you're micro this year, you'll be micro next year - even if your turnover is £100million and you have 5,000 employees.

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Replying to TerryD:
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By sigcima
01st Jul 2016 15:12

Indeed, just planning so that we capture the right level of detail and employ the correct (limited) standards from day 1 to avoid work at year end..

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