It’s an exciting time for sure, as extra changes to accounting regulations to make things simpler and better are now upon us.
In 2016 we saw ‘larger’ entities move to reporting under FRS 102 and now smaller and micro entities must embrace the changes for themselves.
So more section numbers and acronyms, but what does it all actually mean? How might it affect your accounts?
The simple answer to all of the above is that it will depend on the nature of your business BUT it’s crucial that you take this seriously and discuss it with your accountant as soon as possible.
In all cases there will be some minor restatement of accounts and in certain cases there may be considerable changes to the way you have accounted for certain items in your accounts.
If we look at FRS 102A, areas you should start to think about include:
- investment property
- amortisation of intangible assets
- revaluation of assets
- non market rate loans
- holiday pay
- deferred tax
The output of some of these changes could considerably alter your year-end results.
This may affect how your customers, suppliers, bankers, credit insurers, HMRC, Companies House and other stakeholders view your business, but it’s not all bad news. Some of the changes may be enhancing and may even save you tax.
FRS105 is aimed at micro entities; generally entities who turnover less than £632k and have fewer than 10 employees. If this is you, then you may wish to skip 105 and adopt 102A. Before you decide on this course of action, discuss it with your accountant.
Why might you stick with 105 accounts? Well, they’re far less onerous than 102A, but that may be the wrong option if you’re a growing entity and will inevitably move to FRS 102A in due course anyway.
So what do you need to do?
You should speak to your accountant as soon as possible to determine how you may be affected. It’s that simple!
The sooner you plan for transition, the sooner you can get back to working on growing your business.
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The information in this blog should not be regarded as financial advice. This is based on our understanding in February 2017.