Medvedev, who won a landslide victory in the March 2 presidential polls, will replace outgoing President Vladimir Putin on May 7.
"I propose considering a ban on checks of small businesses by supervising organizations," Medvedev said, adding that similar inspections should be sanctioned by courts or prosecutors.
He also unleashed criticism on local authorities who include payments in legal documents.
"There are references everywhere... to 'contracts' with local, public institutions. What does this mean? Clearly, a legalized bribe now taking a more respectable form," Medvedev said.
Medvedev said small businesses were currently subject to 45 different types of checks, with the number of federal watchdogs at around 30.
Representatives of small and medium-sized businesses welcomed Medvedev's proposal.
Boris Titov, leader of the Business Russia public movement, called the proposal "a breakthrough."
"We support it overwhelmingly. We have been looking forward to the moment," Titov said.
Deputy Prime Minister Alexander Zhukov, who also attended the State Council meeting, proposed establishing regional commissions to encourage small business.
According to estimates by the Russian economics ministry, inspections cost small businesses up to 1.4 trillion rubles ($59 billion) a year.
