The new definition, which came into force this week, defines micro-businesses as those with 10 employees or fewer or sales of less than E2m.
Until now, all businesses with 250 employees or fewer have been classed as SMEs, which groups businesses with a handful of staff together with companies turning over millions, said NFRN parliamentary liaison manager Robert Gunning.
"If we had had this definition before, small retailers could have been excluded from things like the climate change levy.
"This should encourage micro-business friendly legislation and more efficient grant-based funding. That can only be good for federation members across the UK and Ireland."