What Is a Virtual Office?

Written on February 18, 2020
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Technology has completely transformed almost every aspect of our lives—from how we communicate, shop, read, date, work out, watch TV, listen to music, and, of course, how we start businesses, apply for funding, and more.

Thanks to that digital interconnectedness, in 2016, 43% of Americans spent at least some time working remotely, and that number continues to grow. Startups, freelancers, and many small businesses no longer need a physical office space in order to operate. Instead, they may consider running their businesses from a home office or taking advantage of a virtual office. 

What is a virtual office, exactly? The name is actually a little misleading, as virtual offices provide business owners with certain benefits that come with having a brick-and-mortar location. In this article, we’ll go over what a virtual office is (and what it is not), as well as the advantages and disadvantages of a virtual office. Finally, we’ll help you determine whether this service can work for your particular business. 

What Is a Virtual Office Space?

At their most basic level, virtual offices provide business owners with a permanent mailing address and professional mail handling for their businesses. That means the business owner can run their business remotely—whether that’s from home, a coworking space, or on the road—but they’ll forward and send mail to and from their virtual office’s address. Even though this mailing address does exist—virtual offices are, in fact, real offices—signing up for a virtual office service is not the same as renting a permanent office space in which your business can set up shop. 

You can find a virtual office through any number of companies that provide this service: Regus, ServCorp, and Davinci Virtual Office are just three of the biggest virtual office companies out there, all of which hold real estate internationally. But you can also do a quick Google search to find a smaller virtual office in your city. 

Some virtual office companies provide virtual assistant services in addition to standard mail handling, like call answering by a professional receptionist. You may also be able to use your virtual office space for meetings and conferences; reserve coworking or private office space on an hourly or daily basis; or access printing and scanning, videoconferencing, high-speed WiFi, catering, and other corporate services on a rental basis. Again, which of those (or other) business functions your virtual office can provide depends on the company you work with.   

Terms and pricing also vary depending on the virtual office company you use, in addition to the services you add to your standard mailing address and the location of the address itself (prestige addresses generally fetch higher rates). Most virtual office companies allow a choice of monthly or yearly leases. Prices tend to range from about $30 to $100 per month but can vary based on your location and needs. Some virtual office companies charge hourly if you want to reserve a meeting room, or a per-person, per-day charge for renting a fully furnished office. 

Pros and Cons of Using a Virtual Office

Now that you understand what a virtual office is, let’s address why a business owner may want to use this service.

Advantages

A major reason why business owners choose to use virtual offices rather than renting dedicated offices or storefronts is the price. Obviously, renting a virtual office for $30 a month is much less expensive than leasing and maintaining a traditional office space, since you won’t be responsible for significant overhead costs like rent, utilities, cable and WiFi, and office furniture and supplies.    

Assuming your virtual office company offers it, you will have access to a physical office space on an as-needed basis, whether that’s for in-person catch-ups with your team, meetings with clients or vendors, interviewing potential employees, or if you just want to work from a different location on a given day. 

Of course, the main appeal of using a virtual office is for the mailing address it provides, which can be beneficial for both organizational and credibility purposes. The former is pretty self-explanatory—i.e. you may prefer that your personal and business mail aren’t intermixed, which can make filing difficult—but the latter is subjective. Depending on your industry and preferences, you may believe that having a business address that’s separate from your home address makes your business look more reputable or established to clients and vendors. That can especially be the case if your virtual office address has some cache to it, like Fifth Avenue in midtown Manhattan.      

We also need to mention that using a virtual office goes hand-in-hand with working remotely. There are tons of benefits of letting employees work remotely (which extend to you), like saving time and money, establishing a better work-life balance, encouraging creativity and innovation, and boosting focus and productivity.

Disadvantages

The main disadvantage of a virtual office space is its limitations. For example, not every virtual office company offers the option to rent a physical office space, and some offer little more than mail handling and call answering and forwarding services. Virtual offices usually require signing up for packages that dictate which of their available services you can take advantage of and when. You’ll likely need to schedule a time to use their meeting and conference rooms in advance, and you may be subject to a time limit on those services. 

As an alternative, you can consider setting up shop in a coworking space near your home. Your coworking space will likely have fewer restrictions around when you can pop in and which services and amenities you can use. And most (but not all) coworking spaces allow freelancers, solopreneurs, and very small businesses to use their mailboxes as a forwarding address for as long as they’re leasing space there.    

Should You Use a Virtual Office?

The first step in determining whether to use a virtual office is to determine whether you can truly run your business remotely, or whether you need to lease a dedicated office space. Obviously, if it’s the latter, then using a virtual office is unnecessary. 

Most very new or small startups and solopreneurs that don’t require storefronts can effectively run their businesses from home. But some industries are more conducive to working remotely than others. And if you have employees, no matter how few, you may prefer that your team all works under one roof depending on your preferences and values. In either case, you might also consider leasing a (non-virtual) permanent office. Businesses that anticipate growing quickly will also need a dedicated office space to accommodate their expanding team and operations. 

If you are comfortable working remotely, you still may not find a need for a virtual office. There’s nothing inherently wrong with using your home address as your business address. But if you’re concerned about presenting your business in a certain light, you’d prefer to keep your personal and business mail separate, and if you anticipate needing corporate services beyond a mailbox, then you should definitely consider using a virtual office. Remember that renting a desk at a coworking space and using their address as your forwarding address is an option, too (assuming that’s permitted at your particular coworking space).

So you have some decisions to make. But the great thing is that there’s no longer one, prescribed way to run your business—and if you choose to run it non-traditionally, there are plenty of services out there to help you do it. 

Sally Lauckner

Sally Lauckner is the editorial director at Fundera and the editor-in-chief of the Fundera Ledger. She has over a decade of experience in print and online journalism. Previously she was the senior editor at SmartAsset—a Y Combinator-backed fintech startup that provides personal finance advice. There she edited articles and data reports on topics including taxes, mortgages, banking, credit cards, investing, insurance, and retirement planning. She has also held various editorial roles at AOL.com, Huffington Post, and Glamour magazine. Her work has also appeared in Marie Claire, Teen Vogue, and Cosmopolitan magazines. Sally has a master's degree in journalism from New York University and a bachelor's degree in English and history from Columbia University.  Email: sally@fundera.com.
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