The Best Business Phone Systems of 2023

The process of choosing a business phone system requires you to answer a couple of questions. First, what type of phone connection do you want – landline, VoIP or virtual? Second, how do you want to host the system – on your business premises or in the cloud?

All business phone systems today, regardless of type, are PBX systems. The PBX equipment is what allows these systems to provide all of their features and tools, such as multiple extensions, voicemail, and call recording. However, the type of system you choose affects where that PBX equipment is physically located.

>> Learn More: Does Your Business Need an Auto-Dialer?

Your IT staff needs to install and maintain PBX equipment with on-premises systems. Conversely, cloud-hosted solutions require very little IT resources, since all of the PBX equipment is housed and maintained by the phone system provider. With the cloud-hosted option, your IT team can focus more on managing the system’s features than the infrastructure.

Read a breakdown of each type of phone system.

Traditional Landline

Traditionally, businesses used analog landline telephone systems. These systems were connected to the public switched telephone network and ran on the telephone company’s copper wiring.

While these multi-line phone systems were extremely reliable, they required expensive equipment to install and maintain. Besides the copper wiring that had to run through the business facilities, landline systems required costly PBX equipment. The PBX is what’s used to switch calls between the business and the telephone network. It’s also necessary for various calling features, such as voicemail, conference calling and automated attendants. All of this PBX equipment (and the other hardware necessary to run the phone system) would be housed onsite at the business, typically in a server room or closet.

>> Learn More: What Is Interactive Voice Response (IVR)?

Today, analog multi-line landline phone systems are becoming obsolete. Telephone companies are no longer developing new analog systems or providing updates to the systems they used to offer. Finding IT professionals with the skills to keep these systems running is increasingly difficult. Telephone companies have largely shifted their attention to VoIP technology.

Some landline systems now use a mix of landline and VoIP technology. There might be a traditional landline connection to a business, but instead of traditional wiring throughout the building, the business uses an internet connection to tap into that outside landline.

Very few new businesses are choosing landline phone service. Because support for these systems is diminishing, they are best suited for a business with an in-house IT team that is skilled in this technology and can handle all the maintenance and upgrades. However, landline systems are the only option for businesses in communities with no high-speed internet access.

VoIP

Nearly all new business phone systems use VoIP. Instead of running on copper wiring like landline systems do, VoIP systems run on a high-speed internet connection. It’s the same connection most businesses already use to get online.

When you make a phone call with VoIP, your voice is instantly converted to a data packet that moves through the internet like an email or shared image would. Tapping into an existing data connection saves you the trouble and expense of installing and maintaining phone lines throughout your offices or stores.

>> Learn More: Non-fixed VoIP Systems

VoIP systems also work in conjunction with cheaper and less bulky PBX equipment. This allows small businesses to access phone features they previously couldn’t afford, like auto-attendants, conference calling and call recording. Similar to how a landline system works, the VoIP provider allows you to choose a phone number with a local area code, a toll-free number or both.

VoIP systems easily integrate with computers, which lets employees make calls from their own devices and have voicemails sent directly to their email, among other things. It can also be beneficial for businesses using CRM programs because you can use the systems in tandem.

Ease of use and scalability are big benefits of VoIP phone systems. Most VoIP systems can be managed from an online portal. By logging in to the system, administrators can assign phone numbers or extensions and turn various features on and off.

VoIP providers make it easy to add new users. Administrators can quickly log in to the portal to add new lines. This simplifies the process of setting up new employees with their own phone lines.

When VoIP was first introduced, call quality was a concern. Many people felt calls sounded staticky; others had problems with calls dropping off. As the technology has improved, so has the call quality. In fact, the difference between VoIP and landline call quality is now so insignificant that most landline callers have no idea when they are speaking to someone using VoIP.

Soon, nearly all U.S. phone users will use VoIP. The only businesses that can’t take advantage of VoIP phone systems are those in communities without access to high-speed internet service or with unreliable internet service.

Did you know? How you want the PBX equipment hosted is a huge factor in choosing a phone system for your business. The choice is generally between cloud and on-premises hosting, though some phone providers offer a hybrid option.

On-Premises VoIP

With an on-premises system, the PBX equipment is installed inside your business. Your IT team is responsible for securing it, keeping it up and running, and upgrading it when necessary. Hosting your phone system on your business premises lets you keep several traditional landlines working alongside SIP-trunked VoIP lines.

Like landline systems, on-premises VoIP systems have all the equipment installed and housed onsite at the client business. The hardware is typically stored in the business’s server closet.

With this option, you have total control of your system. You aren’t relying on anyone else to ensure it’s running, and you can configure it to your exact specifications. However, this also means your own IT staff has to handle all repairs and upgrades.

FYI: On-premises systems must be professionally installed, and you will need SIP trunking or PRI circuits to connect a dial tone to the system.

One benefit of this hosting method is tighter security. On-premises systems don’t have the same security concerns as cloud-hosted solutions, since all your data is stored within your business. You can configure your firewalls exactly how you want to protect your phone system from any type of intrusion. This makes on-premises hosting the best option for businesses with highly sensitive phone data that can’t entrust it to cloud-based phone providers.

Other businesses well suited for on-premises phone systems are large corporations that can afford the upfront costs and businesses that want a system they can customize extensively.

Cloud-Hosted VoIP

Cloud-hosted phone systems are increasingly popular among small businesses. With this type of system, the equipment is housed in the cloud by your service provider, which handles all maintenance and upgrades. The only equipment you need is the phones themselves.

Most cloud systems are essentially plug-and-play. Once you activate your service and receive your phones, you can plug them into any Ethernet port, then make and receive calls with them.

The downside to cloud-based solutions is that you’re at the provider’s mercy to keep your service up and running. Most of the top vendors build several redundancies into their systems to ensure this. For instance, they have multiple data centers so that if one goes down, the data can be transferred seamlessly to another center to ensure the continuation of your business’s communications service.

One important consideration in a cloud-hosted system is bandwidth. Consult your business’s internet service provider about the bandwidth required to support a new phone service. Most of the cloud providers we considered require just short of 100 Kbps per phone call for the best quality. You’ll also want to estimate your internet needs for other equipment, such as computers, servers and Wi-Fi-connected devices.

>> Learn More: Optimize Your Network for VoIP

Cloud-based VoIP systems are ideal for small businesses: They have few upfront costs, the consistent monthly charges fit easily into a budget, and they don’t require trained IT experts to keep them running. You can add new users and features through a convenient online portal, and cloud-based options also easily support multiple locations.

Nearly all of the providers we examined have an uptime of at least 99.99%. That means their systems are down for just a few minutes each year. It’s still best to install backup equipment that can reroute your business calls during power or internet outages.

Virtual Phone System

Virtual phone systems differ from regular office phone systems in that, when someone calls your business phone line, they aren’t necessarily calling a dedicated number to a phone inside your office. Instead, they call a virtual phone number that routes calls to you (or your employees) wherever you are.

Virtual phone systems are essentially extensive call-forwarding systems. Your business has a main number, with each employee receiving their own extension. Instead of transferring customers to an employee’s office phone, the virtual system transfers calls to their mobile and home phones. Employees control the numbers their business calls go to and the order in which those numbers ring. Virtual PBX systems also offer other valuable features, including automated attendants, voicemail, voicemail-to-email, music on hold, call forwarding and online faxing.

These systems are ideal for businesses that don’t need a full-fledged phone system. This could include solopreneurs who work out of their homes and don’t want to give out their personal phone numbers to clients, and small businesses with a remote workforce. This service allows them to present a professional image at a fraction of the cost of complete phone systems.

Desktop Phones

Once you decide which type of phone system you want, you need to choose the actual phones. (This doesn’t apply to virtual systems, of course.)

Most business phone services are compatible with various IP phones and offer adapters so analog phones can connect to their systems. You can likely continue using any phones your company already owns.

IP phones come in various styles. There are cordless phones and conference room phones as well as traditional corded options. The phones can cost anywhere from $50 to $1,000 each. The per-phone analog adapter can cost up to $60, and a traditional fax-machine adapter costs $100 to $150. If you don’t want to buy the phones outright, some providers let you rent phones for a monthly fee.

The benefit of buying IP phones from your phone system provider is that they come completely configured and ready to use once you plug them in. If you buy phones from a third party, your IT team will need to configure them to work with the system you use.

If you can afford it, it makes sense to upgrade your phones. If you can’t afford new phones, carefully consider how much the workaround will cost your company in the long term.

Today’s business phone systems are full of valuable features and tools. Some VoIP providers have a few dozen features; others offer over 100.

Calling Features

• Unlimited calling: Most of today’s VoIP phone systems allow an unlimited number of incoming and outgoing calls. This usually only applies to domestic calls and calls using local phone numbers, though. Many providers impose extra charges and restrictions for toll-free calling.
• Voicemail: Each employee has access to their own voicemail. Most systems allow you to check your voicemail from anywhere.
• Voicemail-to-email: When you get a voicemail, the system sends you an email with your message as an audio attachment.
• Caller ID: You can see the number of the person calling you.
• Speed dial: Instead of dialing an entire number, you can push just a couple of buttons to connect to the numbers you call most.
• Personal directories: A personal directory is an easy way to manage your contacts. It gives you access to your contacts’ phone numbers whenever you need them.
• Do Not Disturb: When working on a big project or important task, you can put your phone in this mode to prevent interruptions. Your phone will not ring, and all callers are sent directly to voicemail.
• Automated attendant: An auto-attendant automatically answers calls to your business, plays a greeting, and directs the caller to the person or department they are trying to reach. [Related article: 5 Reasons You Should Consider Using a Virtual Receptionist]
• On-hold music: You can choose the music callers hear while they wait on hold.
• Paging: You can use your phone to send a message to everyone. This is similar to a traditional intercom system.
• Presence: This shows employees whether their colleagues are on a call or available to chat.
• Call reports: This feature provides analytics on your company’s phone usage. You can often break down usage statistics by filters such as employee or department.
• Online management: All VoIP systems can be managed in an online portal. From the portal, you and the other administrators can add users, set phone numbers, review call reports, create ring groups, and see monthly statements. Employees can also access the portal to check their voicemail, see a company directory and set their call-forwarding routes.
• Call forwarding: Your office phone can automatically forward calls to another number, such as your cell phone when you’re out of the office.
• Call recording: Most phone systems give you the ability to record your calls.
• Call queues: This tool is typically used in call center settings. It puts callers “in line” so their call can be answered when operators become available.
• Extension dialing: Employees can use this to dial a co-worker by their extension instead of their entire phone number.
• Ring groups: You can create ring groups for employees who answer calls from the same set of customers. For example, your customer service team might have its own ring group. The entire group is notified when a caller asks to speak to a customer service representative.
• Directory assistance: This allows callers to access a company directory to help them reach the employee they are looking for.
• Call transfer: Employees can quickly transfer calls to their colleagues.
• Speakerphone: Many IP phones include a speakerphone option that allows you to speak to a caller without using the phone’s handset.

FYI: Another popular feature is the ability to turn your computer in a softphone. This allows you to make and receive calls from your laptop or desktop computer.

Unified Communications System Features

In addition to all of the calling features, today’s phone systems offer, some providers offer unified communications systems. Besides phone service, UC systems include conference calls, video and web conferencing, online faxing, and text and instant messaging.

• Conference calling: Most phone systems include a conference bridge that allows users to host their own conference call with several dozen participants. If your system’s conference bridge doesn’t support as many callers as you need, you may need a separate highly rated conference call service.
• Video conferencing: Video conferencing allows you and your team members to host online meetings from your computers or from rooms with video conferencing equipment. You can share your screen with participants during these meetings.
• Instant messaging: Many UC systems allow employees to instant-message each other. This is an easy way for co-workers to communicate without leaving their desks or all being in the same place.
• Texting: Some systems allow you to send SMS messages from your business phone number.
• Internet faxing: Instead of hooking up a traditional fax machine, you can send faxes from your computer with this feature.

Mobile Apps

Mobility is another important aspect of today’s business phone and UC systems. Most of them offer an app for iOS and Android mobile devices that lets your employees tap into their business phone lines wherever they are.

The biggest benefit of a mobile app is that you and your employees can make and receive calls with your business phone line wherever you are. This allows you to leave the office, even if you expect an important call. When out of the office, you can also make a call from your business phone number via the app. This allows you to keep your personal number private without using multiple cell phones.

The mobile app also lets you review your call history, check and manage your voicemail, IM your colleagues, start one-on-one video calls, and view your online faxes.

WHY AND WHEN DO YOU NEED BUSINESS PHONE SERVICE?

Whichever type you choose, every business needs a phone system. At the very least, a business phone system helps you present a professional image. Having customers or clients reach you on your personal phone line might be practical in some instances, but it doesn’t project the image that most businesses are striving for.

Even if you can’t spare the money or don’t need office phones, you can still use a virtual phone system for a professional appearance. This service directs calls to your mobile phone while still giving you access to key features like automated attendants and voicemail transcripts – and without requiring you to give out your personal number to business contacts and prospects.

>> Learn More: When Should You Upgrade Your Phone System?

As your business grows, so will your communication needs. A unified communications system can meet these needs. Not only will your employees have their own business lines, which they can access from anywhere with a mobile app, but they can also take advantage of other communication tools, like video conferencing.

All things considered, your business, regardless of its size and whether you operate out of an office or your own home, would do well to invest in some type of business phone system.

HOW LONG DOES A BUSINESS PHONE SYSTEM LAST?

How long a business phone system lasts depends on the type you use. In the case of a cloud-hosted system, however, how long it lasts isn’t really a concern; cloud providers handle all of the maintenance and upgrades. All that key equipment is stored on the provider’s end, so they can work on it anytime without interrupting your services.

On-premises systems are different. Since the equipment for these systems is housed on your servers, it has a shorter life span. If you have an IT team to maintain this equipment properly, you can expect it to last five to eight years.

HOW DO BUSINESS PHONE SYSTEMS WORK?

The exact way a business phone system works varies by type (landline, cloud or virtual). Still, the general principle is the same for each: Business phone systems provide ways for your customers and business contacts to reach you by telephone and vice versa.

Each user of a business phone system has either a dedicated phone number or an extension. When someone calls that number, their office phone, or any other phone they are having their calls forwarded to (such as their cell phone), will ring.

Business phone systems use PBX equipment to provide many features and tools that expand their functionality. These features typically include an automated attendant that answers calls to your business and then routes those calls to the appropriate person. The PBX equipment also allows for tools like voicemail, caller ID, conference calling, instant messaging, and call recording.

HOW MUCH DOES A BUSINESS LANDLINE COST?

The cost of just one business landline can run $50 to $100. Businesses typically require more than one line, though; they also want PBX equipment and the added features of business phone systems.

In all, businesses can expect to pay several hundred to several thousand dollars for a landline system. However, landlines are becoming obsolete. Phone system providers are investing in the continued development of VoIP systems. Because of this, no new technology is being developed for landline phone systems, and the number of technicians who can maintain and service these systems is declining.

WHAT IS A UNIFIED COMMUNICATIONS SYSTEM?

A unified communications system is a service that gives businesses all of the communication tools they want to use in one platform. Besides phone service, UC systems include conference calls, video and web conferencing, online faxing, instant messaging, and text messaging.

Many providers now offer these complete systems rather than simple phone systems. Having all these tools on one platform can not only save your business hundreds (if not thousands) of dollars a month, but also boost your employees’ productivity and make things easier for them. Instead of toggling between different services to access each tool, employees can just log in to their UC portal and tap into all their communication apps from the same place.

WHAT IS A FOUR-LINE PHONE SYSTEM?

A four-line phone system is designed for very small businesses, providing phone service for up to four users. Four-line systems typically don’t include the wide range of features that VoIP business phone systems do.

WHAT QUALITIES SHOULD YOUR BUSINESS PHONE SYSTEM HAVE?

It would be best to consider several factors when choosing a business phone system. First and foremost, it should support all of your employees. Most modern systems allow you to add lines easily and can accommodate hundreds or even thousands of users. Some providers require a minimum number of users, which very small businesses can’t always meet, so make sure the system you want can support your team size.

The second factor to consider is whether it offers all the tools your employees need. Besides the traditional calling features, does it offer video conferencing, conference calling, text messaging or any other communication methods you want? You may want a provider that allows you to mix and match service plans. This way, you can ensure each employee has the tools they need without paying for enhanced plans for employees who don’t need every feature.

>> Learn More: What is a VoIP Business Number?

Price should also be a consideration, of course. With so many options on the market, you should be able to find a service that fits in your budget. In addition to the per-user cost, you should get a true sense of your monthly bill once all the fees and taxes have been included.

Strong customer support is the final quality you must consider when choosing a business phone system provider. In an ideal world, the system would always work perfectly, but that is rarely the case with any piece of technology. Make sure the provider you choose offers the support options you want, such as 24/7 phone support, live chat operators or helpful online guides.

WHAT ARE THE DIFFERENCES BETWEEN PHONE SYSTEMS FOR LARGE BUSINESSES AND PHONE SYSTEMS FOR SMALL BUSINESSES?

While there used to be big differences between phone systems for large and small businesses, all sizes of businesses now have access to the same types of solutions.

Before cloud-hosted PBX systems became an option, only larger businesses could typically use sophisticated phone systems with many features and tools. The on-premises PBX equipment necessary to power those features was so expensive to buy and maintain that only large businesses could afford it. That left small businesses with simpler options that didn’t have the bells and whistles that their larger counterparts could enjoy.

Cloud-hosted business phone systems have leveled the playing field. Instead of paying thousands of dollars for PBX equipment, small businesses can now tap into the same features for a fraction of the cost. Cloud-hosted systems provide all the features and tools for a much smaller monthly fee. Besides, since the equipment is housed in the cloud, there is nothing to maintain or upgrade.

The cloud has allowed small businesses to use phone systems they could never have before. They can access features like auto-attendants, on-hold music, call recording, voicemail-to-email, and video conferencing, which only larger businesses could afford previously. Cloud-hosted VoIP phone systems give every business the means to present a professional image regardless of size.

WHAT DO YOU NEED TO SET UP A VOIP PHONE SYSTEM?

Your VoIP business phone system will run on the same connection your company uses to get online, so the first thing you need is a strong internet connection. For the system to run smoothly, you need enough bandwidth to support your call volume and the rest of your online business activities. You must also set your router to prioritize voice calls over other online use.

If you use a cloud-hosted system, the only other supplies you need are the phones, since all of the PBX equipment is hosted in the cloud. The PBX equipment is what powers all of the phone system’s functionality.

>> Learn More: Looking For a Business Phone Number, but Not a Business Phone?

You will need all PBX equipment hosted inside your business facilities if you operate an on-premises VoIP phone system. This type of equipment typically needs professional installation.

Most of today’s systems are compatible with IP phones and analog phones. However, if you use analog phones, you will need a special adapter to connect them to your system.

WHAT IS THE DIFFERENCE BETWEEN VOIP AND PBX?

VoIP is the type of connection used to run the phone system. A VoIP system makes calls and receives over an internet connection. Traditional landline systems relied on copper wiring to provide those functions.

PBX (private branch exchange) is the equipment that provides the features and tools of the phone system. Both VoIP and landline systems rely on PBX equipment. The difference is that some VoIP systems are housed in the cloud, so you don’t need to install PBX equipment within your business location. On-premises VoIP and traditional landline systems use PBX equipment installed and stored inside your business, most often in the server room.

Chad Brooks contributed to the writing and research in this guide.