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Home Telephone Service vs. Business Telephone Service: What's the Difference?

Dave Thomas

Most of us have needed to set up home phone service at one time or another. The process is as easy as researching which phone companies offer service in your area (or signing up for service with a VoIP provider), figuring out what features your family needs and deciding on a plan that best fits your family's phone usage and budget.

For a small startup, setting up business telephone service can be as easy as setting up service in your home (although you'll still probably pay more for service). However, if you're a larger company, or a company with plans for growth, your phone service needs might be a little more complicated.

You'll need to consider how many users you'll likely have, what calling features you'll require, and how many long-distance or international calls you'll likely be making and receiving. And while your local phone company is a good place to start researching service providers, you'll also want to check out what's available in the world of VoIP, where the potential for savings is big.

Below we've outlined the main differences between residential and business telephone service.


Business lines generally cost more than home service - some estimate up to 75 to 120 percent more - but you should be getting more calling features for the markup. The price of a business telephone system is dependent on the type of system you choose and the provider. Systems can range anywhere from $20 per line (for a basic KSU-less system) to more than $1,000 (for a PBX system) depending on how sophisticated the system is and how many users you have.


Business telephone lines are generally higher traffic than residential lines. Homeowners might only use their phone to stay in touch with friends and relatives, schedule doctors appointments or order a pizza, while businesses rely on them for daily communication with customers, clients and co-workers across the country or around the globe.

Your business might need to make more long-distance or international calls than the average homeowner, so it's important to evaluate how you will be using your business line before selecting a plan.


The telephones you will use for your business are typically more sophisticated than the ones you'd use in your home. While your home phone might include features like an answering machine, speakerphone and caller-id, your business phone will need to be able handle multiple lines, call-forwarding, conferencing and other features.

If you're using a VoIP service provider for your business telephone service, you will probably need to purchase digital IP phones, which will allow you to take advantage of the wide range of services VoIP has to offer.

Your telephone service provider will be able to help you decide which equipment is most suited to your needs.

Call features

Homeowners might only need one or two phone lines that  have more limited calling features. They may only include voicemail, call waiting and 3-way calling. For a small start-up or home-based businesses, these features might be enough to get by. But that's not the case for a company with plans for growth.

Most businesses require multiple lines and more features from their phone service, including call forwarding, automated call handling, extension dialing, conference calling, dial-by-name directory, fax and more. To determine which call features would be the most useful for your business, it's important to estimate the volume of calls you believe you might receive at any given time. If you expect to receive multiple calls simultaneously, a two-line residential phone wouldn't be able to accommodate the high call traffic.

Phone numbers

The process for assigning phone numbers to a residential line versus a business line is essentially the same, unless you purchased a toll-free number for your business. Toll-free numbers can also be randomly assigned, but some companies offer business owners  the chance to pick an easy-to-remember vanity number (think 1-800-FLOWERS) for an additional charge.

In order to maintain a more professional image and make it easier for your customers to get in touch with you (and easier for you to identify incoming business-related calls), setting up a separate number for your business is wise. You won't have to use your personal number on marketing materials or risk having your kids answer business-related calls.

Toll-free numbers can be purchased from telephone companies or one of several providers online.

Tax deductions

If you're running a home-based business or you work from home periodically, the IRS allows you to deduct calls you make for your business from home. These can either be itemized calls on your regular home phone line or 100 percent of calls made on a second business line (provided all the calls made on the business line are business related).

Service level

Phone companies - especially VoIP service providers -- might be quicker to respond to service problems on business lines than on residential lines (business owners are paying the premium, after all).

Learn more about setting up your business phone system at business.com.


Image Credit: Monkeybusinessimages / Getty Images
Dave Thomas
business.com Member