What good looks like
A business turning over about £1 million
£1 million is the turnover limit for a micro-entity, so a company at this size is at the point where its accounts category can change. It may also have staff and be thinking about borrowing.
The short answer
At about £1 million, a company is at the micro-entity turnover limit, so whether it can file micro-entity accounts depends on its balance sheet and staff numbers too. Compared with a business of about £250,000, we would expect regular figures, monthly or quarterly, and a cash forecast. Someone other than the person paying bills may check the bank. These are good practice and our judgement, not legal requirements.
What support a business this size may have
| Kind of support | What a business this size may have | Basis |
|---|---|---|
| Bookkeeping and systems | A bookkeeper, in-house or outside, keeping the records up to date each week or month in accounting software. VAT records kept digitally if VAT registered. Payroll run each pay period if there are staff. | Legal requirement (digital VAT records, payroll registration). Our judgement (how often). |
| Accounts, tax and VAT | Annual accounts and tax returns from an accountant, VAT returns, and payroll and pension filings for staff. | Legal requirement |
| Monthly management information | Management accounts each month or quarter, with a comparison against last year or a budget. | Published guidance (ICAEW)1 |
| Planning and cash forecasting | A cash forecast updated regularly, and a yearly budget to compare results against. | Published guidance (ICAEW)1 |
| Financial controls and approvals | If there is a bookkeeper or office manager, the owner approves payments they set up, and someone checks the bank account against the records each month. | Our judgement |
| Finance leadership | May still be the owner, with more regular advice from the accountant. A part-time finance director only if the business is borrowing, raising money or growing fast. | Our judgement |
| Specialist support | An accountant with experience of the sector, or of a particular issue such as selling abroad or holding stock. | Our judgement |
What changes from about £250,000
The page for a business turning over about £250,000 sets a low bar: possibly no regular figures, the owner approving everything. At about £1 million we would expect more, for these reasons:
- Regular figures. The ICAEW says "annual accounts are not enough to control a business" and that "Most businesses need to produce quarterly operating statements and, better still, at monthly intervals."1 At this size we treat that as the expected position, not an extra.
- A budget. The ICAEW says budgets "are normally used internally to help management to run the business, monitor its progress".1
- A second person in the money. Once someone else sets up payments or keeps the books, it is worth having a clear rule on who approves what. This is our judgement.
The legal points at this turnover
- Micro-entity limit. A company is a micro-entity if it has two of these three: turnover of £1 million or less, £500,000 or less on its balance sheet, 10 employees or less.2 These limits apply to financial years starting on or after 6 April 2025.3 So a company just over £1 million can still be a micro-entity if its balance sheet and staff numbers are within the limits. One just under it may not be, if both of the others are over. Ask your accountant which category your company is in.
- Small company and audit. The small company limits are turnover of £15 million or less, £7.5 million or less on the balance sheet and 50 employees or less, two of three needed.2 A private company meeting at least two of the audit exemption tests can be exempt from audit, though some, such as some subsidiaries, must be audited anyway.4
- VAT. Registration is required once total taxable turnover for the last 12 months goes over £90,000.5 If a business of this size is not registered, it is worth checking with your accountant why, for example because its sales are VAT exempt.
- Staff. An employer normally needs to register with HMRC before the first payday6 and must provide a workplace pension scheme for eligible staff.7
What else matters as much as turnover
- Borrowing. Lenders set their own rules. Allica Bank, for loans over £75,000, asks for six months of business bank statements, two years of accounts, and management accounts if the last filed accounts are more than six months old.8 One lender's rule, given as an example.
- Margins. A £1 million business with thin margins and a lot of stock may need closer cash management than one with high margins and no stock.
- Growth and selling abroad. Both can push a business towards the support described for about £2 million sooner.
About this standard
This describes what a business of about this turnover may have. It is a working assumption from published guidance, not a survey average, and not a rule your accountant must follow. How our standards work.
Sources
- ICAEW, "Managing your business" (Find a Chartered Accountant, help with your business). icaew.com. Checked 12 October 2026.
- GOV.UK, annual accounts guidance, "Micro-entities, small and dormant companies". gov.uk/annual-accounts/microentities-small-and-dormant-companies. Checked 12 October 2026.
- The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (SI 2024/1303), regulations 2(2) and 9. legislation.gov.uk. Checked 12 October 2026.
- GOV.UK, "Audit exemptions for private limited companies". gov.uk/audit-exemptions-for-private-limited-companies. Checked 12 October 2026.
- GOV.UK, "Register for VAT: when to register". gov.uk/vat-registration/when-to-register. Checked 12 October 2026.
- GOV.UK, "Register as an employer". gov.uk/register-employer. Checked 12 October 2026.
- GOV.UK, workplace pensions guidance for employers. gov.uk/workplace-pensions-employers. Checked 12 October 2026.
- Allica Bank, "Business loans" (lender requirements). allica.bank/business-loans. Checked 12 October 2026. One lender's rule, given as an example.