Although 60% of small businesses are using cloud computing services, the remaining 40% are put off by security fears.
According to research by the Federation of Small Businesses (FSB), data theft or loss is the biggest concern for companies that have not yet taken up cloud computing services.
Their concerns were: data theft or loss (61%), reliable access to online services (55%), concerns over who would have access to the data (53%), liability issues (41%), and over-dependence on cloud services (33%).
Citing its 2012 European Commission report, the FSB said using cloud computing could help 80% of organisations reduce their costs by 10-20%.
"Many small businesses are recognising the advantages of cloud computing services, but there remains a great deal of concern that sensitive data may not be secure or the service not reliable,” said FSB national chairman John Allan. “Businesses don't want to transition to cloud-based systems without knowing who will be liable if something goes wrong.
"Clearly, there is more for the industry and regulators to do to reassure businesses that their data is safe and secure. But equally apparent is the message from small businesses that pricing and terms and conditions need to be much more transparent."
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The FSB survey revealed that 45% of small businesses are already greatly or fairly reliant on cloud computing services.
The most common services were storing files online (74%), web-based email and calendars (67%), file-sharing services (64%), web-based office software (38%) and accounting and invoicing services (37%).
About half of respondents (48%) said plain English terms and conditions would help persuade them to use cloud computing services, and 46% wanted more transparent pricing.
"The fact that so many businesses are already heavily reliant on web-based services raises some pointed questions over the resilience of the wider UK economy if we can't find answers to questions like global data security and legal jurisdiction over data held in other countries," Allan added.
In a recent survey conducted by the European Commission’s Eurostat statistics service, public cloud computing was reportedly used by 24% of large enterprises and 12% of small and medium-sized enterprises (SMEs) in the EU.
However, the survey noted that the risk of a security breach scored highest both for large enterprises and SMEs, at 57% and 38% respectively.