Which of the following is a key threshold for micro-entities?

The threshold for micro-entities is defined by specific financial metrics aimed at simplifying reporting obligations for small businesses. For a company to qualify as a micro-entity, the criteria typically include limits on turnover, balance sheet total, and the number of employees. Specifically, turnover must not exceed £632,000. This limit ensures that very small businesses can benefit from reduced reporting requirements, enabling them to focus resources on business operations rather than extensive compliance processes.

The other thresholds related to balance sheet totals and the number of employees are associated with small entities rather than micro-entities. The balance sheet limit of £316,000 is relevant to micro-entities, but the primary defining feature is the turnover threshold of £632,000, which places a clearer focus on the gross income of the entity rather than its financial position or human resources, which are considered in larger classifications such as small entities. The number of employees being under 100 pertains to small entities, not specifically micro-entities, reinforcing that turnover is the key limiting factor in this context.