What good looks like
A business turning over about £2 million
At about £2 million, a business is past the micro-entity turnover limit and may have someone working on its finances in-house. This is the size at which we start to ask who looks ahead, not only who keeps the records.
The short answer
A company at about £2 million is over the micro-entity turnover limit, so it is a micro-entity only if both its balance sheet and its staff numbers are within the limits. Compared with about £1 million, we would expect monthly figures with a short note on what changed, a forecast checked against actual results, and written rules on who approves payments. Some businesses at this size also start to use a management accountant or part-time finance director. All of this beyond the legal points is good practice or our judgement.
What changes from about £1 million
| Area | About £1 million | About £2 million |
|---|---|---|
| Accounts category | At the micro-entity turnover limit | Over the turnover limit: micro only if the other two tests are met |
| Figures | Monthly or quarterly | Monthly, with a short note on what changed |
| Forecast | A cash forecast updated regularly | A forecast checked against actual results each month |
| Controls | Owner approves payments set up by someone else | Written rules on who can approve what, and how much |
| Leadership | Owner, with the accountant's advice | Worth asking whether a management accountant or part-time finance director would help |
The right-hand column is our judgement, built on the published guidance in the table below. It is not a measured picture of what £2 million businesses have.
What support a business this size may have
| Kind of support | What a business this size may have | Basis |
|---|---|---|
| Bookkeeping and systems | A bookkeeper or finance assistant, possibly in-house, with records kept up to date weekly. VAT records kept digitally. Payroll each pay period. | Legal requirement (digital VAT records, payroll registration). Our judgement (staffing and frequency). |
| Accounts, tax and VAT | Annual accounts and tax returns, VAT returns, payroll and pension filings. Small company or micro-entity accounts, depending on the tests below. | Legal requirement |
| Monthly management information | Monthly management accounts, compared with a budget, with a short note and a few key measures. | Published guidance (ICAEW on budgets and key ratios)1 |
| Planning and cash forecasting | A yearly budget and a cash forecast, both compared with actual results so the forecast can be corrected. | Published guidance (ICAEW: "compare forecast figures with actual results")1 |
| Financial controls and approvals | Approval limits written down. The person who sets up a payment is not the only person who approves it. Bank checked against the records each month by someone other than the bookkeeper. | Our judgement |
| Finance leadership | Someone, inside or outside the business, who prepares budgets and forecasts and explains them to the owner. This can be the accountant, a management accountant or a part-time finance director. | Our judgement |
| Specialist support | Sector experience, and help with any particular issue such as selling abroad, research and development tax questions or raising finance. | Our judgement |
The ICAEW says businesses "need to plan ahead and compare forecast figures with actual results", and that a comparison of performance with budget, together with key ratios, helps decide whether plans need to change.1
The legal points at this turnover
- Micro-entity or small. 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 At £2 million the turnover test is failed, so the company is a micro-entity only if it meets both of the other two. Otherwise it may be a small company: turnover of £15 million or less, £7.5 million or less on the balance sheet, 50 employees or less, two of three needed.2 These limits apply to financial years starting on or after 6 April 2025.3
- Audit. A private company meeting at least two of the audit exemption tests (turnover of no more than £15 million, assets of no more than £7.5 million, 50 or fewer employees on average) can be exempt. Some companies must be audited anyway, such as some subsidiaries, and shareholders holding at least 10% of shares can ask for an audit.4
- VAT. Registration is required once total taxable turnover for the last 12 months goes over £90,000.5
What else matters as much as turnover
- Staff numbers. A business with more than 10 staff is past one of the micro-entity tests, whatever its turnover. More staff also means more payroll work and more people spending money on the business's behalf.
- Borrowing. A lender may ask for up-to-date management accounts. For example, Allica Bank asks for management accounts if your last filed accounts are more than six months old, for loans over £75,000.6 One lender's rule, given as an example.
- Stock and selling abroad. Either can mean the business needs stock counts, currency or customs advice, or tighter cash management.
- A simple, steady business at this size may manage well with less than the table describes. That is a choice to discuss with your accountant.
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.
- Allica Bank, "Business loans" (lender requirements). allica.bank/business-loans. Checked 12 October 2026. One lender's rule, given as an example.