People are being put off starting their own business because of excessive bureaucracy, it has been claimed.

Online retailer myHermes.co.uk said small businesses are being forced to spend too much time dealing with red tape.

Jonathan Bennett, head of marcomms at the company, said small firms are "often working to tight margins and the competition is ferocious".

"Time and money spent on laborious administration eats into their profits and slows down potential growth," he stated.

A group of MPs, the All Party Group for Micro Businesses, recently called for a redefinition of what constitutes a micro business, and for more favourable taxation.

The group argues a micro business should be defined as employing fewer than five people, rather than the current definition of nine or less.

"I think it is definitely worth looking at and considering another tier," said Mr Bennett.

"A large number of our customers who use the myHermes delivery service have just one or two employees, and to assume they face the same issues as businesses four times the size is unrealistic."

Article courtesy of Aviva PLC. Published 09-12-2011