A study of 250 employers found that for the 52% of firms that have engaged in such downloading, the experience of buying illegal software proved to be extremely risky, with 41% believing their details were used in identity theft.
In addition to this, 28% had their credit card cloned, 41% state that their product did not arrive or arrived late, while 33% claim they were charged too much.
The research also revealed that 88% of small businesses feel that illegal software use means they are more likely to have liability concerns, as a result of buying a product which fails health and safety compliance, causes injury, inconvenience to customers, inconvenience to staff, and lost revenue.
For some it appears that the buying and downloading of illegal software was accidental, with a large number saying that they took action to address the situation once they discovered they had purchased fraudulent software.
Half of small businesses replaced the software with a legitimate copy, 27% paid for a legal software key and 10% uninstalled the software but did not replace it.
Michala Wardell, UK committee chair of BSA, said: "The practice of downloading illegal software among small businesses is clearly widespread.
"The research suggests that a large number of UK businesses have an unclear understanding of what constitutes illegal software use, at best, and a blatant disrespect for copyright law and business ethics, at worst.
"It's encouraging to see that many of these businesses have taken action to address the error, often at their own expense. But to avoid undue costs and security risks, businesses need to be more vigilant about where they buy their software from in the future.
"As things stand, too many small businesses are exposing themselves to unnecessary hazards."
