Micro-entity and small company describe the size of your company.
Dormant describes whether your company is trading.
A company can be both at once — for example, a micro-entity that's actively trading, or a small company that's currently dormant. Get the classification wrong and you risk filing the wrong type of accounts, missing an exemption you're entitled to, or under-reporting to Companies House. Here's how each one works and exactly what you need to file.
Quick comparison
| Micro-entity | Small company | Dormant company | |
| Based on | Company size | Company size | Trading activity |
| Qualifying test | Meets 2 of 3 size thresholds | Meets 2 of 3 size thresholds | No significant accounting transactions |
| Can it be trading? | Yes | Yes | No |
| P&L filed at Companies House currently? | No | No (usually omitted) | No |
| Director's report required at Companies House? | No | Optional | No |
| Audit required? | Usually exempt | Usually exempt | Usually exempt |
What is a micro-entity?
A micro-entity is the smallest size classification a trading company can have. For accounting periods beginning on or after 6 April 2025, your company qualifies as a micro-entity if it meets at least two of these three conditions:
- Annual turnover of no more than £1 million
- Balance sheet total of no more than £500,000
- An average of no more than 10 employees
- What micro-entities must file
Micro-entities benefit from the lightest reporting burden of any active company:
- A simplified balance sheet, prepared under the micro-entity provisions
- A statement confirming the accounts were prepared under the micro-entity and small companies regimes
- No obligation to file a profit and loss account or directors' report with Companies House (though both must still be prepared for members)
- Usually exempt from audit, provided the qualifying conditions are met
What's changing
From 1 April 2028, micro-entities will be required to deliver a copy of their profit and loss account to Companies House — though they'll be able to opt out of having it published on the public register. Software-only filing will also become mandatory from the same date, closing the current WebFiling and paper routes.
What is a small company?
A small company is larger than a micro-entity but still qualifies for reduced reporting. For accounting periods beginning on or after 6 April 2025, a company is small if it meets at least two of these three conditions:
- Annual turnover of no more than £15 million
- Balance sheet total of no more than £7.5 million
- An average of no more than 50 employees
Because a micro-entity also automatically falls within the small company size bracket, every micro-entity is technically a small company too — it's just a stricter sub-category within it.
What small companies must file
Small companies can prepare accounts under the small companies regime, disclosing less than a medium or large company would:
- A balance sheet (with the small companies regime statement)
- Notes to the accounts
- Currently, small companies can choose to omit the profit and loss account and directors' report from what they send to Companies House
- Usually exempt from audit, provided the qualifying conditions are met
- Currently still able to file abridged accounts — a stripped-down balance sheet and P&L, if members agree
A small company can be actively trading, dormant, or somewhere in between — the size classification says nothing about whether the business is operating.
What's changing
From 1 April 2028, small companies will lose the option to file abridged accounts and will be required to deliver a full profit and loss account and directors' report to Companies House (with an opt-out from public display of the P&L, details still to be confirmed by Companies House). This is a bigger shift for small companies than for micro-entities, since abridged accounts are being phased out entirely.
What is a dormant company?
A dormant company is classified by activity, not size. For Companies House purposes, a company is dormant if it has had no significant accounting transactions during the financial year.
Certain transactions are disregarded when working out dormancy, including:
- Companies House filing fees
- Late filing penalties
- Payment for shares taken by subscribers at incorporation
A company can become dormant in two ways: it may be newly incorporated and never have started trading, or it may have traded previously and then stopped. Either way, dormant doesn't mean closed — the company remains on the register and must keep filing its confirmation statement and annual accounts, and it can stay dormant indefinitely while it continues to meet the conditions.
What dormant companies must file
Dormant company accounts are the simplest of all:
- A balance sheet with a statement confirming the company was dormant throughout the accounting period
- Prior year comparative figures
- Minimal notes
- No profit and loss account or directors' report required
- Automatically exempt from audit (if dormant since incorporation, or dormant since the end of the previous year and otherwise meeting the small company conditions)
Dormant accounts can typically be filed online or via paper form AA02, though from 1 April 2028 all filing routes move to commercial software.
Can a company be more than one classification at once?
Yes — this is the part that trips people up. Size and activity are independent:
- A company can be a micro-entity and actively trading
- A company can be small and dormant
- A company can be a micro-entity and dormant
None of these combinations are contradictions. What changes is which set of filing rules applies, and dormancy generally takes priority for simplifying what you send to Companies House, regardless of your size classification.
Why the distinction matters
Getting your classification right affects:
- What you must file — and filing the wrong version of your accounts can lead to rejection and a late filing penalty
- Whether you're exempt from audit
- What becomes visible on the public register — dormant and micro-entity accounts disclose far less than small or medium company accounts
- Deadlines and penalties — these are the same regardless of classification, but knowing your filing obligations in advance avoids scrambling near the deadline
