The Best Small Business Phone System 2020

It often seems like you can’t go anywhere without your phone nowadays. And if you’re a business owner, having a reliable small business phone system is a must. Without a good business phone system, you could lose big points on customer service and miss out on profit-generating leads.

Fortunately, small business owners in need of a phone system have a variety of options. These range from a free Google Voice phone number to make and receive calls online to a premium landline system. What’s right for you will depend on the size of your company, your call volume, where your staff works from, and your budget.

We’ll walk you through the different options, identify the best product in each category, and tell you what to look for when shopping for a small business phone system. With the help of this guide, you’ll be able to have a reliable small business phone system in place within just a few days.

Small Business Phone System: Your 3 Options

Before the internet, small businesses in need of a phone system really only had one option—a traditional landline phone system. The local phone company would come in and install phone jacks and copper wiring in the walls, a costly, labor-intensive effort. These wires connected to a telephone exchange, which routed the call to the correct destination.

Many businesses still have this type of traditional phone system, but with the advent of the internet, there are additional, more budget-friendly options. Small business owners can choose among traditional landlines, voice over internet protocol (VoIP), and virtual call services. Here are more details on each option.

Traditional Landline With PBX

Best for: Larger businesses that want a reliable, full-featured phone system. This is also the only option for businesses without high-speed internet.

Cost: $500 to $2,000 per user

Many businesses opt for a traditional landline phone system installed by a local or regional phone company. Landlines, which are also sometimes called plain old telephone service (POTS) (yes, that’s really the acronym!) or public switched telephone network (PSTN), rely on a signal that runs over copper wires and connects to a local telephone exchange. The exchange “reads” the phone number you want to call and routes your call to the correct destination. Due to the digitization of telephone exchanges, many modern call features are available with traditional landlines, such as call waiting, call forwarding, caller ID, voicemail, speed dial, and conference calls.

If a call originates or ends at a business, you’ll also need a PBX, or private branch exchange. PBX is a switch that enables calls to be routed to different business extensions, so everyone at a company doesn’t need their own phone line.

One advantage of traditional landlines is the reliability. The phone system will work even if you’re experiencing a power outage or issues with your internet connection. The downside is cost. Along with setup, maintenance and repairs can be expensive. Plus, call cost is based on time and distance, with a premium for international calls. The lifetime cost of a traditional landline business phone system ends up being around $500 to $2,000 per user.

Voice Over Internet Protocol (VoIP)

Best for: Small businesses that already have high-speed internet and want a full-featured phone system. Ideal for businesses with remote employees.

Cost: Starts at $20 per month per user

VoIP is a newer type of phone system that allows you to make and receive calls using your existing internet connection rather than traditional copper wires. WhatsApp, Skype, and Google Voice are popular examples of VoIP technology.

With VoIP, you can access unique features like call attendant software, voicemail to email transcription, and SMS capability. VoIP phones typically integrate with other business software (such as your business CRM) that you’re already using, which can help businesses provide better customer service. Another big benefit of VoIP is that you’re no longer tied to a physical phone. You can use the VoIP provider’s app on your smartphone or computer to make and receive calls (this is called a “softphone”), and you can easily give remote workers access to a business phone system from their cell phones.

A VoIP phone system is 35% to 50% less expensive and easier to install than a traditional landline system. If you already have a high-speed internet connection, you can basically set up these phones out of the box on your own. Providers charge a pre-set monthly cost for a specific number of users or minutes.

Virtual Call Service

Best for: Home-based business owners who already have a landline or cell phone but want to project a more professional impression.

Cost: Starts at $30 per month for one virtual phone number

Yet another option for a small business phone system is a virtual call service. A virtual call service is similar to VoIP because it’s managed online. You can add phone numbers and extensions for users from an online account. However, unlike VoIP, there is no hardware to purchase or software to install with a virtual call service.

A virtual call service is more of an add-on to your existing phone service, rather than a separate phone system. Calls get forwarded over a secure network to your existing cell phone or landline. This is a good solution for businesses that already have a landline or cell phone but want the professionalism of a separate business phone number.

You can use a virtual phone service to set up different business extensions and custom greetings and voicemail messages. You can also get a toll-free or vanity phone number, like 1-800-FLOWERS, through a virtual phone service.

Virtual phone services don’t depend on your internet connection, making them more reliable than VoIP. Calls get routed through secure data centers, which have backup power sources in the event of an outage.

small business phone system

What to Look for in a Small Business Phone System

The features that you’ll need in your business phone system depend on your industry, the size of your workforce, and the type and volume of calls you handle.

But these are some features that small businesses typically find helpful:

  • Caller ID: Know who’s calling before you pick up the phone.
  • Call forwarding: Send a call from one mobile phone or landline to another.
  • Hunt group: Route calls to the first available person in a group so that the customer or lead doesn’t get sent to voicemail.
  • Voicemail: Manage calls when you’re not available with helpful features like voicemail-to-email transcription.
  • Integrations: Some phones sync with CRM software and other business software that you already use, which can be helpful for sales-heavy businesses.
  • Conference calling: Let more than two people be on a call at one time, perfect for meetings when not everyone is in the room.
  • Auto-attendant/call menu: Route calls to the right department or individual.
  • Hold music or message: Minimize hang-ups while the caller is waiting to speak with someone.
  • Speed dial: Enable quick outbound calls.
  • Headset-enabled phones: Talk hands-free, a big help for businesses with heavy call volume.
  • Microphone-enabled handsets: Block out background noise and increase your business’s privacy.
  • Different types of numbers: Some providers let you choose between a local, toll-free, or vanity phone number.

These 11 features are the ones that small businesses use most often, but you might not need every one. Think about how often you’re on the phone, your mix of inbound and outbound calls, and who is making and receiving the calls when determining which features you need. Obviously, you also have to account for budget, and the more features you want, the more you’ll have to pay for your small business phone system. Ultimately, you’ll need to strike a balance between features and affordability.

small business phone system


Best Small Business Phone Systems: Our Top Picks

The cost and quality of a traditional small business phone system will vary based on the local and regional phone companies near you. VoIP phone systems and virtual phone services are easier to compare and rank because the same companies provide nationwide service.

Here are the best small business phone systems:

1. RingCentral: Best Overall Small Business Phone System

Cost: $20 to $50 per month per user

Over 350,000 businesses use RingCentral’s VoIP small business phone system. RingCentral offers over 50 features to accommodate almost any small business need. Some of the features are standards that you’d expect in any good phone system, such as call waiting, speed dial, and conference calling. However, other features stand out, such as call recording, a built-in virtual phone number service, and video calls/screen sharing. You can call, fax, or text from your business phone or any mobile device.

Getting set up with RingCentral is easy. Since this is a VoIP service, you don’t need any specialized or expensive equipment other than the actual phones. You can buy phones from RingCentral or an outside vendor. If you buy them from RingCentral, they come pre-configured right out of the box. And no matter where you buy the phones from, a RingCentral account specialist will walk you through setup.

There are four service plan levels. The least expensive, at $20 per month per user, limits you to 10 users, four video-conferencing users, and 100 free minutes per month. The plans scale up from there based on number of included users and minutes.


  • One of the most full-featured VoIP services available
  • Choose from four service plans according to your business’s needs
  • The only equipment you need is the phones, which you can buy through RingCentral or an outside vendor (you can also use their app as a softphone)


  • Phone, live chat, and email customer service is available, but the quality of the service gets mixed reviews

This small business owner uses RingCentral:

“I am the co-founder of a digital life insurance brokerage. We have five employees. We use RingCentral for VoIP phone service. The pros are that it is easy to set up new users and has great phone and desktop apps for ease of use. It’s also easy to add and remove users from the call forwarding. On the downside, it is expensive and hard to cancel lines if they were one of the first few added, and the admin screen can be difficult to navigate.”

—John Holloway, Co-Founder, 

2. 8×8: Most Secure Small Business Phone System

Cost: $25 to $55 per month per user

The 8×8 VoIP business phone system is one of the most secure and reliable in the industry. Over 50,000 businesses across 150 countries trust 8×8 for their business phone needs. 8×8 is an especially good choice for ecommerce businesses and sensitive data industries (like health and finance). 8×8’s business phone system is certified HIPAA compliant, PCI compliant, and compliant for businesses that work with the U.S. government.

You’ll be hard-pressed to find a more reliable small business phone system than 8×8. The company has nine data centers distributed across the globe. If there are power outages or issues at one data center, the other data centers provide fallback coverage to reduce disruptions to your phone service. Of course, if you have spotty internet in your own place of business, that can disrupt your phone system since VoIP phones run on the internet.

Setup with 8×8 is easy. You either purchase preconfigured phones from 8×8 or buy phones from a separate vendor. 8×8 offers a free installation walkthrough to get you going. Overall, 8×8 has fewer features than RingCentral but has all the basics that most small businesses would need. You’ll get good bang for your buck if you make international calls or send internet faxes. All plans include unlimited calling to a subset of countries outside the U.S. and Canada, as well as unlimited online faxes.


  • One of the highest uptime performances in the industry
  • Send unlimited online faxes and unlimited international calls to certain countries
  • Scores high points for customer service


  • Slightly higher in price compared to other VoIP systems
  • Not as many features available as RingCentral

This small business owner uses 8×8:

“8×8 is a good value for the price. It’s relatively easy to use and has all the standard features.  It interfaces well with our business, and we’ve had no reason to switch carriers. 8×8 can be a bit frustrating if you aren’t technically oriented. On occasion, the mobile app can time out on its own, so if you’re out of the office you may miss a couple of calls. However, they are constantly working to improve the app.”

Nate Masterson, CEO, Maple Holistics

3. Best Budget Small Business Phone System

Cost: $13 to $40 per month per user (Further discount if you pay annually) is an excellent entry point for budget-conscious small businesses that want a cloud-based small business phone system. The company does pricing on a sliding scale based on call volume. A business that needs fewer than 300 domestic minutes per month will do fine with the entry-level, $13-per-month plan.

Despite the fact that is so budget-friendly, you’ll find most of the features that a small business would need. All plans include call screening, call routing, hold music, business SMS, auto attendant, and more. However, certain features (like call recording and video conferencing), which are standard with RingCentral and 8×8, come at an extra cost on If you need these feature upgrades, then RingCentral or 8×8 might be a better value for you.

You can buy phones from or an outside vendor. Alternatively, you can use your existing cell phone or computer to make and receive calls.


  • Sliding scale pricing makes this a budget-friendly option
  • Includes basic features that small businesses would need
  • You can buy phones from or an external vendor, use your cell phone or computer, or port over an existing number


  • Must pay extra for features that other providers include as standard

This small business owner uses

“We are a digital marketing agency offering marketing consultation services to small businesses. We use ourselves and we also implement it for some of our clients. The pros are good customer service, which is very important for VoIP services, and unlimited number of extensions, and it’s very flexible as you can create schedules for redirects, etc. is also relatively affordable (we previously use RingCentral which is significantly more expensive).”

Steve Kurniawan, CEO, I Know SEO

4. Grasshopper: Best Small Business Phone System for Home-Based Businesses

Cost: $29 to $89 (discount for annual payment)

Grasshopper is a good option for home-based business owners who already have a landline or mobile phone and just want a separate business phone number. Grasshopper is a virtual phone service, not a full-fledged phone system. It acts on top of your existing cell phone or landline, so you can do business with the phone you already have. You can also add extensions to your employees’ cell phones so that everyone’s phone is business-ready.

There’s no hardware to purchase or install with Grasshopper because it works with your existing phone system. You can get a local, toll-free, or vanity phone number and can forward incoming calls to that number. When you make outbound calls to customers, they will see the new number even if you’re calling from your personal cell phone or landline. Other features are also available, such as a custom voicemail greeting, auto attendant, voicemail to email transcription, and conference call capability.

Since this isn’t a full-fledged VoIP phone system, you can’t access certain features like call recording and video conferencing. Grasshopper service plans start at $26 for one number and three extensions, and go up to $80 for five numbers and unlimited extensions.


  • Affordable cloud-based phone service (no per user fee)


  • Missing some core features, such as outbound fax and call recording
  • Designed primarily for businesses that already have an existing phone system

This small business owner uses Grasshopper:

“My husband and I own a watersports business and have been using Grasshopper for over two years. Besides the two of us, we have three other seasonal employees, giving us a total of five numbers to which we can route calls. Because our business is seasonal, and because our booking agents work from home, Grasshopper allows us flexibility that we don’t get with traditional phone plans. Calls can be announced, so you can tell if the incoming call is a customer or a personal call. Plus, we have the ability to turn an agent’s phone on and off from anywhere at any time.”

—Heather Thomas, Co-Owner, Destin Vacation Boat Rentals

5. Google Voice: Best Small Business Phone System for Side Hustlers

Cost: Free

For business owners who want nothing more than a separate local phone number for their company, Google Voice is a good, free option. Google will assign you a local telephone number from a pool of numbers that individuals and businesses have previously deactivated. The caveat here is that you don’t really own the number. Another individual or business can reclaim the number later—making things messy if you’ve already advertised this number to your customers.

As a free service, Google Voice is also missing some important features. For instance, there’s no call recording or outbound caller ID. That means the person receiving your call just sees a Google Voice number, rather than your business’s name—not exactly the most professional impression. You also cannot get a toll-free or 1-800 number the way you can with most other small business phone systems. But, if you have offices located in multiple cities, you can choose a local phone number for each city.

Although Google Voice is missing some functionality, people who have a side hustle or part-time business might be able to get everything they need from this phone system. Google Voice integrates with other Google services, such as Gmail for voicemail transcription and Hangouts for video calls. This makes it easy for business owners to access all of their communications in one place.


  • It’s a free service
  • Integrates with other Google products


  • Phone numbers can be reclaimed by other businesses or individuals
  • Missing important features like call recording and outbound caller ID

This small business owner uses Google Voice:

“I have always run my real estate investment business with a Google Voice number because I was able to choose a number that gave my business a local feel. Some of the pros are that it’s free, keeps business calls separate from personal calls on one cell phone, and if I need to upgrade cell phones, I don’t have to worry about transfer issues. As my business grew, I was able to keep my Google Voice number and forward business calls to a service called Moneypenny, which is a virtual receptionist company. We were able to integrate the Google Voice platform with their service so that they would be the front people to take the calls first but still gave me the option of picking up the call if I was available.”

—Jonathan Faccone, real estate developer and investor, Halo Homebuyers LLC

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The Best Small Business Phone Systems Will Improve Your Customer Service

The bottom line is that most business owners need a small business phone system. Studies show that more and more customers prefer text or email to voice calls, but modern small business phone systems accommodate various types of communication.

There are options are every price point, and your customers will have a better experience when they contact your company. Ultimately, that’s what makes your business memorable and will keep customers coming back.

Priyanka Prakash, JD

Priyanka Prakash is a senior contributing writer at Fundera, specializing in small business finance, credit, law, and insurance. She has a law degree from the University of Washington and a bachelor's degree from U.C. Berkeley in communications and political science. Priyanka's work has been featured in Inc., Fast Company, CNBC, and other top publications. Prior to joining Fundera, Priyanka was managing editor at a small business resource site and in-house counsel at a Y Combinator tech startup. Email:
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