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Which Business Phone System is Best for Your Business?

Matt D'Angelo
Matt D'Angelo
Freelance Writer

Here's how to narrow phone options down with this quick list.

Good communication is essential in any business. From Slack to Basecamp to Trello, there are hundreds of apps to help your business break down communication barriers and operate more efficiently. In an age where there's an app for everything, how necessary is a traditional phone system?

Communicating with customers and clients requires businesses to have some type of phone system. Depending on your business's needs, there are many different options for purchasing and installing a phone system.

Overall, only relying on mobile phone plans for your business may not be the best approach – a professional, well-run business needs certain features like an automated receptionist or voicemail to present a good company image and connect customers with whom they are trying to reach.

Luckily, there are several different types of phone systems that prove effective for all businesses, from those with many workers in the field to those operating largely from one location.

Editor's Note: Looking for a phone system for your business? If you're looking for information to help you choose the one that's right for you, use the questionnaire below to have our sister site, BuyerZone, provide you with information from a variety of vendors for free:


Phone system types

Landline: This is a traditional phone system where you plug the phone into the wall and work with a local phone company. Landlines rely on physical wire connections monitored and run by regional phone companies. This means that opting for a landline will guarantee a reliable connection, but there may be fewer features compared internet-based phone systems.

The other aspect about landline phones is that the telecommunications industry is slowly moving away from this technology. While landlines provide a strong connection and reliable service, it is not an aspect of the industry that is expanding. VoIP phone systems also generally offer more feature options compared to landlines.

One more thing to note about landline systems is that they often require private branch exchange, or PBX, hardware at your business's location to provide features like call transferring. This can make landline plans more expensive than internet alternatives, like virtual phone systems or VoIPs.

Voice over internet protocol (VoIP): This technology pairs your phone system with your internet connection. Essentially, VoIP systems connect you with other users via your internet service provider. This can be good or bad depending on how reliable your internet connection is for your business.

There are a lot of advantages to using a VoIP system. VoIPs offer a ton of features, from automated voicemail boxes to conference calling. This technology features a multitude of different features that could be beneficial to your business. The system does not require a PBX and instead harnesses the power of the internet to enact a lot of the features that at one time required the expensive hardware. Because of this, VoIP plans can be less expensive than landline options depending on how many users you are looking to add to your system. 

This technology has come a long way, rivaling landlines in quality and reliability. It's cheaper and offers more features, making it the most popular choice for businesses. VoIP systems also work with computers, and some integrate with other programs. The quality of the calls depends on your bandwidth, so you should have excellent internet service before choosing this option.

If you select VoIP, you must decide if you want the system hosted at your business or in the cloud. Hosting it at your business is also known as establishing an on-premises VoIP system. This involves purchasing or renting expensive software outright and then paying a monthly fee as well.

In addition to hosting the equipment, you and your business are responsible for maintaining it. This can add to the overall cost, but it can make sense for some businesses that want to be responsible for their own service should it go down. In cloud-based VoIP systems, any problems with the service are handled directly by the provider.

Cloud-based systems require no maintenance or hardware. Instead, all the technical services are handled directly by the service provider. This service option is often structured on how many users are needed for the system. Overall, it is often significantly cheaper than premise-based VoIP systems because you won't have to buy additional hardware. [See why we chose Dialpad as the best cloud-hosted phone system.]

Virtual phone system: Virtual phone systems can be a great option for businesses with a lot of employees working in many different locations. Virtual systems are not a full-fledged phone system. Instead, it helps provide different features for your business while still operating on your mobile or home phone network.

This can also be a great option for small businesses looking to create a professional image without investing in a VoIP or landline system.

What to look for

Price: Landline systems cost around $60 to $80 per line per month. AT&T offers a plan for about $63 per month for 1,400 minutes of local calling and unlimited long-distance calling, but this does not include PBX hardware, which could run the cost up significantly more. This also doesn't include the price of the physical phones you will be using.  

Cloud-based VoIP runs $15 to $50 per user monthly. These prices vary depending on service provider, the number of features you wish to include and the number of users on your account. On-premises VoIP systems cost a one-time fee of $500 to $1,250 per user, plus an installation fee that can be thousands of dollars.

In addition to the service, you may need to purchase phones. Some providers include basic phones with the service. If not, desktop phones cost $50 to $500 each, while conference phones range from $500 to $1,000.

Virtual phone systems can range from $10 to over $50 per month depending on what features you want to include in your plan. Two examples of virtual phone companies are Grasshopper and Phone.com.

Reliability: Regardless of what type of system you get, make sure you choose one that is the most reliable and best fit for your business. Consider uptime, the number of data centers and redundancy, how many call carriers the provider works with, and how it ensures you don't lose service (or, in an emergency, get service back quickly). Reliability is the most important aspect of your phone service provider. [Read our review of RingCentral if you're looking for an extremely reliable phone system.]

Security: If your business needs maximum security or would like to customize its own security, a premises-based VoIP or landline system are both good options. If you're establishing a cloud-based network, look for data encryption during transmission as well as at the physical security of the data centers.

Mobility: For virtual systems, the mobility aspect will be inherent. But for VoIPs, ask about mobile options. For example, some providers have mobile apps that let the user make calls on their smartphone through the service. This allows you to use "softphones." (More on that later.)

Support: If you don't have an IT staff, then 24/7 support is a must. Also, look at how many ways there are to contact support and how quickly you can expect a response. User reviews can alert you to the most common complaints.



Features will vary based on the type of phone system you decide on. Some companies vary their features based on what type of plan you purchase. Most phone systems come with a basic feature set, then charge for additional features, either through a high-tier plan or add-on charges. Features include the following:

  • Automated attendant
  • Call monitoring
  • Call queues
  • Conference calling
  • Directory assistance
  • Extension dialing
  • Integrations with programs like Outlook and Salesforce
  • Interactive voice response
  • Missed call notifications
  • Ring groups
  • Toll-free or local number
  • Video chat
  • Voicemail
  • Call recording
  • Call reports
  • Call routing/forwarding
  • Voicemail transcription
  • Voicemail-to-email
  • Voicemail-to-text
  • Internet faxing
  • Interoffice instant messaging
  • Call transferring
  • Call forwarding

Of all the systems listed, the VoIP phone systems will likely offer the widest range of features for a more affordable price compared to a landline system. [Check out GoToConnect, our top-rated phone system for features and tools.]

Differences between hardphones and softphones

One feature that service providers are offering is the ability to turn other devices into what are known as softphones. These devices aren't phones but can access the features of your phone system. Some VoIP providers offer voicemail to your smartphone as text messages or directly to your email inbox. This effectively turns your computer into a phone.

Hardphones are the physical phones that you and your colleagues will use in the office. When choosing a phone system, it's important to consider if you want features that allow you to access important aspects of your plan like voicemail. Using softphones can increase efficiency or productivity depending on what works best for you and your business.

Bottom line

As with choosing anything for your business, it's important to assess your needs before diving into a new product. For phone systems, determining your budget, how many users will be included and how flexible you want your service to be is a good baseline for determining which system will work best for you.

Image Credit: Chainarong06/Shutterstock
Matt D'Angelo
Matt D'Angelo
business.com Contributing Writer
I've worked for newspapers, magazines and various online platforms as both a writer and copy editor. Currently, I am a freelance writer living in NYC. I cover various small business topics, including technology, financing and marketing on business.com and Business News Daily.