It comes as firms prepare to make "serious decisions" about jobs and investment early next year.
In a draft letter intended for the Brexit Secretary and obtained by Sky News, five of Britain's biggest business lobby groups also called for the transition period to match current trading arrangements with the European Union as closely as possible.
Theresa May has requested a time-limited transition of around two years with the UK and EU trading on broadly similar terms to now and payments to Brussels to fulfil already agreed budget commitments.
But although EU leaders have agreed to begin scoping work on a future relationship, they have made clear to the Prime Minister she must make more concessions on a divorce payment to unlock talks on trade and a transition.
The private letter, which is believed not to have been sent yet, was reportedly signed by the CBI, British Chambers of Commerce, manufacturing trade body EEF, the Institute of Directors and the Federation of Small Businesses.
It said: "Agreement (on a transition) is needed as soon as possible, as companies are preparing to make serious decisions at the start of 2018, which will have consequences for jobs and investment in the UK.
"And the details of any transitional arrangement matter: the economic relationship the UK and EU has during this time-limited period must match as close as possible the status quo."
The letter added: "It is vital that companies only have to undertake one adjustment as a result of the UK's withdrawal, not two - and that businesses, the UK Government and authorities in the EU have enough time to make the changes needed to deliver Brexit successfully."
Commenting on behalf of the Open Britain campaign group for close ties with the EU, Labour MP Chuka Umunna said: "Business groups are understandably alarmed by the Government's lack of progress in the talks.
"And the full-blown Cabinet disagreements over how a transition period would work make it even less likely that a deal will be reached.
"No deal would be devastating for business, for people's jobs and wages and for national security. The Prime Minister needs to face up to the reality of the situation, stop pandering to the ideological zealots driving the country towards a cliff-edge, and commit to staying in the Single Market and Customs Union."
Additional reporting by Press Assocation