Micro-Entity Balance Sheet Explained Line by Line

This heading captures share capital that has been called up from shareholders but not yet actually paid into the company. For most small owner-managed companies with fully paid £1 or £100 shares issued at incorporation, this line is nil or does not appear at all.

Fixed assets are items held for continuing use in the business rather than for resale, such as equipment, vehicles, fixtures and fittings, and intangible assets like purchased goodwill or software. They are shown net of accumulated depreciation or amortisation.

Under the micro-entity regime you don't need the detailed fixed asset note that a small company would provide, but you still need to depreciate assets sensibly and keep a fixed asset register behind the scenes.

Current assets are items expected to be converted to cash, sold or used within 12 months: trade debtors, stock, cash at bank and in hand, and other short-term receivables. This is usually where directors' loan accounts sit if the director owes the company money at the year end.

Prepayments are amounts paid in advance for goods or services not yet received, such as insurance or software subscriptions paid annually in advance. Accrued income is income earned but not yet invoiced or received. Both are typically grouped within current assets on a micro-entity balance sheet rather than shown as a wholly separate section.

This covers everything the company owes and expects to pay within 12 months of the balance sheet date: trade creditors, corporation tax payable, VAT owed, PAYE and National Insurance, accruals, and any director's loan account balance owed to the director.

Net current assets is current assets minus creditors due within one year, showing whether the company has enough short-term resources to cover its short-term obligations; a negative figure is net current liabilities.

Total assets less current liabilities adds fixed assets to that net current assets figure, giving the company's overall net asset position before longer-term creditors and provisions are deducted.

Creditors: amounts falling due after more than one year covers longer-term liabilities such as a bank loan repayable over several years or a director's loan not due for repayment within 12 months. Provisions for liabilities cover obligations of uncertain timing or amount, such as a provision for dilapidations. Accruals and deferred income held separately from current liabilities covers items such as grant income received in advance of the related expenditure.

This final section shows called-up share capital (the nominal value of shares issued), any share premium, and the profit and loss reserve, which is the accumulated retained profit or loss carried forward from all years including the current one. Together these should equal total assets less current liabilities, less creditors due after one year and provisions.

Micro-entity accounts must carry specific wording immediately below the balance sheet: a statement that the company is entitled to the audit exemption under section 477 of the Companies Act 2006, a statement (where relevant) that no notice has been received under section 476 requiring an audit, confirmation that the directors acknowledge their responsibilities for keeping proper accounting records and preparing accounts, and a statement that the accounts have been prepared in accordance with the micro-entity provisions and, typically, FRS 105.

These are legal statements, not optional boilerplate, and their absence is one of the most common reasons a filing is queried or rejected.

Even under the minimal micro-entity regime, certain notes are still required where relevant: advances, credits and guarantees granted to directors, and any financial commitments, guarantees or contingencies not already included in the balance sheet. You also need to disclose the average number of employees during the financial year.

For a step-by-step run-through of pulling all of this together and filing it, see our companion guide (how-to-file-micro-entity-accounts-companies-house). We are an independent firm of Chartered Accountants, not Companies House or HMRC.

Rates, thresholds and deadlines quoted here reflect the 2026/27 UK tax year. Check current GOV.UK guidance, or ask us, before relying on them for your own company.