The Small Firms Association has said that with the right environment, small businesses in Ireland could generate 20,000 jobs next year.
In its end of year statement, the SFA said that small businesses must be placed at the heart of economic policy in 2014 as they are the drivers of innovation and a permanent source of employment.
SFA chairman AJ Noonan said that despite the financial crisis since 2008, there are still 200,000 small firms in Ireland which employ 655,000 people. Every year another 13,000 new business are set up.
"Entrepreneurship is alive and well, but must be nurtured and developed with a key focus from both agencies and Government," Mr Noonan said.
He said the Government must do everything it can to reduce employment costs next year. "When employment costs rise, small firms are less likely to take on new staff," he points out.
The SFA also called on the Government to tackle the "social welfare trap", while it should also address the tax system, which the SFA claims is one of the highest marginal rates in the OECD.
"If the Government puts the right policies in place, this vital sector will drive growth in the wider economy, more so than any other. The small business sector given the right economic conditions will generate the growth needed to create jobs and overcome our debt burden. Small business can lead the way in helping Ireland to recover faster and stronger," the SFA chairman said.