Understanding FRS 105 in Ireland: A Guide for Micro-Entities

If you’re a new business owner in Ireland, you may have heard of FRS 105 in Ireland. This standard is designed for micro-entities, very small companies that meet certain size rules. Knowing how FRS 105 works can help your business meet legal requirements and keep reporting simple.

What is FRS 105?

FRS 105 stands for the Financial Reporting Standard for micro-entities. It was created to make financial reporting easier for the smallest businesses. The standard follows the EU Micros Directive, which aims to cut paperwork and provide a simpler format for preparing accounts.

Who Qualifies as a Micro-Entity?

To qualify, your company must:

• Be set up under Irish company law.
• Meet the micro-entity definition in the Companies Act.
• Not be excluded under the Act.

A micro-entity must meet at least two of these three limits for two years in a row:

• Turnover: €700,000 or less.
• Balance sheet total: €350,000 or less.
• Employees: 10 or fewer.

If you go over these limits for two years, you no longer qualify.

Key Features of FRS 105 in Ireland

1. Simple reporting
FRS 105 has fewer sections than other accounting standards, making it easier to follow.

2. True and fair view
As long as you use the required formats and notes, your accounts are considered fair and accurate.

3. Historical cost only
Assets are recorded at the price you paid, with no revaluation or fair value adjustments.

4. Limited notes
You only need to include:

• Loans, guarantees, or advances to directors.
• Financial commitments, guarantees, or contingencies.

5. Fewer statements
You don’t have to prepare a cash flow statement, comprehensive income statement, or changes in equity statement.

6. No deferred tax or share-based payment reporting
You only account for these when relevant transactions happen.

Why Use FRS 105?

FRS 105 in Ireland saves time and reduces admin work. It’s ideal if you want to focus on running your business rather than managing complex accounts. However, if you need detailed reports for banks or investors, you may want a more advanced standard.

Final Thoughts

FRS 105 can make compliance easier for micro-entities in Ireland. But it’s still important to get professional advice before deciding if it’s right for you.

Richard O’Shea Consultancy is an accounting practice specializing in tailored accounting and tax solutions for small and medium-sized businesses. We offer a range of services including income tax and corporate tax returns, VAT & RTD returns, startup advisory services, company formation, and more.

I am committed to providing personalized assistance to businesses in Carrigaline and beyond. Contact me today to discuss how I can support your financial needs and help your business thrive in our local community.