One in five small businesses are facing higher costs because of their failure to full embrace the Internet according to a recent survey by KPMG and Microsoft.

The survey found that 20 percent of the UK’s smaller firms haven’t even considered using the Internet to find new business opportunities.

Nearly a third are indifferent to using the Internet for increasing productivity, and nearly two thirds are ignoring the impact of ebusiness on tax plans.

The majority of businesses surveyed (69 per cent) are using the internet for marketing products and services on-line, and communicating with customers (63 per cent).

But few have yet to grasp other advantages to be gained from ebusiness, such as trading in multiple currencies, tax planning and compliance, and brand building

Less than five percent of purchases are made on-line. However, this is expected to rise to around 12 per cent in 12 months’ time.