Damning research by the Forum of Private Business has found that small firms across all industries are spending £16.8bn a year dealing with legislation.
Overall 84% of Forum members reported an increase in time spent complying with legislation since 2009 when the last survey took place.
Complying with tax regulation was the most costly at £5.1bn followed by employment law at £4.2 bn and health and safety law at £3.8bn.
Forum head of campaigns Jane Bennett said: “While this is a rise of just 1% compared to two years ago, the increase is greater in real terms because economic activity, which drives the need for compliance, has shrunk significantly since the 2009 survey was carried out.
“Despite several government initiatives – some more effective than others – it is clear that we are heading in the wrong direction as far as reducing regulation for small business owners is concerned.
“We simply want these measures to work properly and for the voices of the UK’s business owners to be clearly heard.”