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The European Union has recently defined a new category of company, the “micro-entity”.

See here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/86259/13-626-simpler-financial-reporting-for-micro-entities-consultation.pdf

A micro-entity is an undertaking which, on its balance sheet date, does not exceed the 

limits of two of three criteria:

- Balance sheet total: £289,415 (€350,000)6
- Net turnover: £578,830 (€700,000)
- Average number of employees during the financial year: 10

Micro-entities are very small companies, qualifying partnerships and qualifying limited partnerships.

In most cases micro-entities are engaged in business at a local or regional level, with limited cross-border activity. Micro-entities have an important role in creating employment, fostering research and development, and developing new economic activities.

However, micro-entities have limited resources to comply with demanding regulatory requirements. They are, generally, subject to the same financial reporting rules as other smallentities.

They can adopt the simpler requirements of the FRSSE (Financial reporting standards for smaller entities) which, although less complex than financial reporting requirements for larger companies, may actually place a burden on the very smallest of entities that is not proportionate to their size.

The Government is seeking to make changes to the Companies Act 2006, and to the accounting regulations made under that Act and under EU law to implement the EU Directive 2012/6/EU of the European Parliament and of the Council (“the Micros Directive”). It would also make comparable changes to the accounting framework for Limited Liability Partnerships The Micros Directive provides an exemption (“the Micros-Exemption”) for micro-entities from certain financial reporting requirements otherwise applicable to small undertakings.

The Micros-Exemption takes the form of a Member State option to exempt micro-entities from
certain obligations that may impose unnecessarily onerous administrative burdens.

The full text of the Directive can be found at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:081:0003:0006:EN:PDF