Annual statistics from the Department for Business, Industry, Energy and Strategy showed a year-on-year rise of 197,000, compared to the same time in 2016.
The number of firms in 2017 is also 2.2 million higher than at the start of the millennium, with 4.5 million businesses in operation back in the year 2000.
Sole traders and the self-employed were behind the year-on-year rise, accounting for 79% of the overall increase.
Small businesses alone accounted for 99.3% of all private sector businesses at the start of 2017, with that figure rising to 99.9% when factoring in medium-sized firms.
SMEs also contributed £1.9 trillion to the economy in combined annual turnover last year, accounting for 51% of all private sector turnover in 2017.
60% of the UK business population is made up of sole traders, while 33% are companies and 7% are partnerships.
Margot James, minister for small business, said:
“The UK now has nearly 200,000 more small businesses since last year – meaning more jobs, more opportunities and more choice.
“Small businesses are the backbone of our economy and our Industrial Strategy is building an environment in which they can continue to thrive.”
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