Q: What is a virtual office and how does it work?
A: A Virtual Office is a service that gives you a business address, a place to receive mail, and access to meeting rooms & physical office space, without having to pay for full-time office rental. This is helpful for small businesses and entrepreneurs.
Heard about virtual offices and want to learn more? In this easy-to-follow guide, we explain how a virtual office works, how it can help your business, and where to get started.
What is a Virtual Office and How Does it Work?
A virtual office utilizes a physical location that receives mail for you and can serve as an official business address for your company. It allows you to have a physical presence in any city without the bloated costs of office space rentals.
It provides all the essentials you’d expect from a physical office — such as a business address and mail processing services.
The big difference is, you don’t pay for full-time office space.
Virtual offices enable businesses to create a commercial presence in a specific location, at a physical office building, but without the cost or commitment of maintaining a workplace.
You may be thinking:
What’s the point?
Why not just rent an office?
When you think about it, few businesses need an office full-time.
A lot of businesses frequently work from home or ‘third place’ locations, such as client offices, coworking spaces, and coffee shops.
Add to that, very few people use their office on weekends. Or at 1am. Or during national holidays.
Yet they still pay for it round-the-clock.
And then there’s Covid-19.
During the pandemic, more businesses than ever shifted to remote and home-based work environments. Many plan to stay that way — even large corporations.
Even so, businesses still need certain elements of an office.
They need a fixed address, a place to receive mail, and occasional access to meeting rooms.
They don’t need those things all at once. They certainly don’t need them 24/7.
And that’s where a virtual office comes in.
So back to our main question…
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What is a Virtual Office Used for?
A virtual office is a combination of people, a place, technologies, and processes that come together to help businesses and individuals work more efficiently, often in a remote way.
Despite its name, a virtual office is a combination of both physical and virtual services.
So, what is a virtual office exactly? And what are the features of a virtual office?
Here are the most common characteristics:
Physical Elements | Virtual or Remote Elements |
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Here’s a quick rundown of these services and how they make up a virtual office:
Physical Elements of a Virtual Office
- Business address: A recognized address at a physical office building, which you can use for mail, for marketing, and for official purposes such as business licensing and LLC setup.
- A place to receive and pickup mail: Mail is received and signed-for by onsite receptionists. You either collect the mail or have it forwarded to an alternate address (such as your home).
- Mail processing and forwarding: Mail can be forwarded daily, weekly, or monthly (usually for an additional fee).
- Onsite receptionist: Receptionists take care of your mail processing. If you arrange meetings at your virtual office, they will also greet guests and help set up your meeting room.
- Meeting rooms and office space: Virtual office users have flexible access to physical workspace, including meeting rooms and private offices. Access is arranged by the hour or by the day. Some virtual office plans have a set number of hours included in the monthly fee, while others charge for meeting room rental by the hour.
- Copy and print facilities: Just like any standard office, a virtual office center has onsite facilities such as copy and print machines. Services like these are usually available for a small extra fee.
Virtual or Remote Elements of a Virtual Office
- Remote receptionist services: A live receptionist service offers remote call answering, message taking, and basic customer service. Calls are answered in your company name, screened, and forwarded or sent to voicemail.
- Digital mail service: Some virtual office centers provide a digital scanning service, so you can view a scanned copy of your mail before deciding whether to have it forwarded or trashed.
- Business number: As part of a virtual phone product, companies can select a business number with a local or toll-free area code.
- Business phone system: A cloud-based phone system with numerous features such as auto attendant, extensions, custom greetings, caller menus, and so on.
Virtual office services are on-demand and flexible, and services can be added or subtracted depending on what you need.
This means the infrastructure can be shared across individuals and businesses, allowing resources to be allocated more cost-efficiently.
What Does a Virtual Office Look Like?
The cornerstone of a virtual office is the address. This forms the basis of all virtual office plans, from basic through to premium.
What’s so special about the address?
Let’s say you buy a virtual office at 369 Lexington Avenue, New York.
To the outside world, this is your office:
But you don’t have to work there. In fact you never have to visit the building.
Ever.
This is the part you really need:
369 Lexington Avenue
New York, NY
10017
The address serves a huge number of business requirements. Opening a bank account, receiving mail, an address for your email and website footer, registering your business, business licensing, and more.
They’re all tied to your address. It doesn’t necessarily matter whether you work there or not.
Speaking of where to work, that’s up to you. You can work from home, from a coworking space, or even from a minivan.
Perception and Credibility
In business, perception is incredibly important.
A virtual office helps your business build credibility.
For a new client or an investor, a company with an office address appears more trustworthy than one with a residential address.
It looks more established. It shows that you’re thinking long-term, you’re professionally minded, and you’re serious about your future business prospects.
To potential clients and stakeholders, those things are important.
Good news is, you can still get that all-important perception and credibility with a virtual office for a lot less than traditional office rental.
Types of Virtual Offices
There are many virtual office examples on the market, and the virtual office layout differs from one supplier to the next.
Yet while they vary slightly depending on the supplier, the basic premise is the same:
Standard Virtual Office Product
Business address
A virtual office provides you with an address you can use to register your business. You can also use your virtual office address on your marketing materials and website.
Mail is received, processed and stored onsite
Virtual offices receive your mail, setting it aside until it’s either forwarded or picked up.
Mail can be collected in-person (usually free) or forwarded (extra charge)
You can pick up mail from your virtual office in person or opt for mail forwarding directly to your home address. Mail forwarding fees depend on the frequency of mail forwarding you choose.
Option to rent onsite meeting rooms by the hour (included with some premium plans)
Some virtual offices also offer meeting rooms for clients to use. You simply reserve the meeting room for when you need it and the center staff will ensure everything is set up for you.
Virtual office suppliers may offer optional extras too.
Common Optional Extras
- Remote receptionist services (call answering and phone-based customer service)
- Business phone system
- Business number
- Meeting room rental
- Coworking or hot desk rental
Like we said, one of the great things about a virtual office is that services can be added or subtracted depending on what you need.
Virtual Office Plans
Alliance offers two virtual office plans, with various add-ons available.
Let’s take a look at the plans in detail.
Alliance Platinum
Key feature: Standard virtual office with an address, mail processing, and add-ons.
What’s included with Platinum?
- Commercial business address
- Mail processing (receive unlimited letters)
- Mail storage and pickup
- Mail forwarding (extra fee applies)
- Front lobby receptionist to manage mail and greet visitors
- Onsite meeting rooms and day offices (hourly fee applies)
Alliance Platinum Plus
Key feature: Same as Platinum, with inclusive meeting room or office rental.
What’s included with Platinum Plus?
- 16 hours of meeting room or private office usage every month (selected locations)
- Plus all Platinum features:
- Commercial business address
- Mail processing (receive unlimited letters)
- Mail storage and pickup
- Mail forwarding (extra fee applies)
- Front lobby receptionist to manage mail and greet visitors
What’s the big difference?
It’s all about the inclusive meeting room and office rental.
In most locations, you can use meeting space or a private office for 16 hours every month. Some clients use it all up in one week. Others spread it across the month and spend 4 hours (half a day) in meetings one day per week.
The key thing here is value.
On average, Platinum Plus provides a saving of 60-70% on meeting room rental.
You can reserve meeting rooms by the hour any time you like, but the hourly fee varies by location.
That’s why so many virtual office users opt for Platinum Plus.
Let’s take a quick cost comparison.
This virtual office at 11500 Olympic Boulevard in Los Angeles, CA, offers:
- Platinum at $99 per month
- Platinum Plus (including 16 hours of meeting room rental) at $199 per month
That’s an extra $100 per month for 16 hours of meeting room usage.
Is it good value? Let’s find out.
Over a month, that extra $100 equates to $6.25 per hour for meeting room rental.
If you book meeting rooms at 11500 Olympic Boulevard separately, the starting rate is $45 per hour. For the same 16 hours, that’s $720.
Over a month, Platinum Plus would save you $620 in meeting room rental.
We think you’d agree, that’s impressive value.
Virtual Office Add-Ons
Both virtual office plans can be customized with add-on services, including:
Live Receptionist: From $125 per month
- What is it? Live call answering in your company name by professionally trained receptionists. Calls are screened and forwarded or sent to voicemail. Receptionists also schedule appointments real-time.
- How does it work? Choose how much call answering time you need each month, ranging from 50 minutes to 500 minutes. Your plan can be easily upgraded or downgraded if needed.
- What’s included? 50-500 minutes of live call answering and appointment scheduling each month, a business phone system, and a business phone number with a local or toll-free area code.
Virtual Phone: $30 per month
- What is it? An online business phone system with 50+ features and a business phone number.
- How does it work? A softphone system enabling you to take calls and manage communications from your cell phone, laptop, or other mobile device. Includes auto attendant, unlimited extensions, custom greetings, caller menus, and more.
- What’s included? A 411-listed business phone number with a local or toll-free area code and an online business phone system with 50+ features.
Coworking: From $55 per month
- What is it? Coworking provides a connected and furnished workplace with an established community of professionals.
- How does it work? Full-time access to your choice of coworking space on a flexible subscription. Use your workplace all day, every day, or simply check in at a time to suit you.
- What’s included? A place to work, WiFi, and standard office amenities such as printing and copying. You can book onsite meeting rooms for an extra fee.
Why Should I Utilize a Virtual Office?
Now you have an idea of what a virtual office is, and how it works, let’s take a look at some of the reasons why businesses utilize a virtual office.
We’ll also cover the main pros and cons of a virtual office.
Why Businesses Use Virtual Offices
Companies approach virtual offices in different ways depending on their ‘pain points’:
- Recognize that they need an address but an office rental is too expensive
- Can’t get a physical office suite in the location they want due to cost or limited availability
- Prefer working from home (due to family or lifestyle choices) and rarely need a physical office
- Testing a new market and reluctant to commit to long-term office rental
- Cautious about real estate commitments, liabilities and cost, and prefer a shorter term agreement with lower risk — particularly during Covid-19
- Already have a physical head office but need a presence in a different part of town for mail or marketing purposes, and occasional meeting room rental
- Happy working from home but don’t want to publish the home address on company website
The most common denominators here are:
- Cost
- Flexibility
- Lifestyle
This is why many business leaders turn to virtual offices.
They want many of the same benefits they get with a traditional office, including a prominent location or ‘presence’, but at lower cost.
Renting private office space is a commitment that requires round-the-clock payment, regardless of how often they use the workspace.
Anytime the occupant is out on business, in a meeting, at home or on vacation, the office space stands empty or, at best, underutilized.
For most small businesses, this is a costly commitment that is just not viable.
Virtual office services are shared across multiple clients, which means this resource is available at a lower cost.
This is particularly relevant during the pandemic.
Widespread shutdown orders and economic uncertainty has driven businesses of all sizes to take extreme cost-cutting measures.
Physical workspace has come under close scrutiny, particularly as physical distancing rules means fewer people are able to use the space.
Underutilization of office space has resulted in a growing number of firms — including large public service organizations, government departments, and multinational firms — setting up a hub-and-spoke network of virtual offices to better serve local markets.
Virtual Office Advantages and Disadvantages
Let’s take a closer look at the pros and cons of using a virtual office.
Virtual Office Advantages
- Supports remote work: A virtual office is best for remote workers, as it doesn’t automatically include access to onsite workspace (unless you choose a plan such as Platinum Plus). It provides a location ‘tether’ for the business while the team works from wherever they feel most productive.
- Saves money: Bricks and mortar take up the lion’s share of office rental. Once you remove that cost, the remaining elements, which make up a virtual office, become much more affordable. These services are shared across multiple clients, which reduces the cost still further.
- Build credit: A virtual office address can be used to establish credit. You can use it to open a bank account, apply for business licenses, set up an LLC, and other requirements linked to business growth.
- Flexible: More than ever, business leaders recognize the need to operate with agility. The workplace is one of the largest cost commitments a business can carry, so it pays to have flexible access to the resources you need, only when you need them.
- Adds legitimacy: A commercially recognized address, and even a prestigious address in an upmarket part of town, adds credibility to your business.
- Customer service: Add-on services such as a live receptionist helps brands build positive customer experiences. A friendly, professional voice at the end of the phone can create positive lasting impressions and lead to loyal customers.
- Better productivity: Virtual office users are not tied to an office space, and are free to work from wherever they are most productive. When you don’t have an office to maintain, you don’t need to worry about responsibilities or admin like building maintenance, insurance, cleaning, or other FM demands.
- Build a professional image: A virtual office helps your business appear established, professional, and even larger than it actually is.
Virtual Office Disadvantages
- Not suitable for centralized teams: One of the disadvantages of a virtual office is that some employees prefer the social interaction of working in physical spaces — especially young people. So if you’re looking for a centralized workplace for daily teamwork and collaboration, it may not be the right solution.
- Not all virtual offices are created equal: Choose the right virtual office provider for your needs, otherwise services may be limited. Some virtual offices operate out of independently owned centers, while others are part of larger brands with standardized services. You’ll need to shop around and compare suppliers to ensure you get the product that suits your needs now, and in the future.
How to Set Up a Virtual Office
By now, you should have a better understanding of how a virtual office works. If you’re still wondering ‘What is a virtual office?’ take another quick look at the virtual office infographic above.
We also recommend diving into our Ultimate Guide to Virtual Offices.
If you’re ready to take the next step toward setting up your own virtual office, read on!
Planning Ahead
Before you start searching for a virtual office location, there are a few things you need to keep in mind:
1. Why do you need a virtual office?
A virtual office helps businesses gain the essentials they need for growth — like an address to set up a business entity or register an LLC — without the cost associated with real estate rental.
Virtual offices offer different features and services. Some services will be a good fit for your business, while others won’t.
Remember, services that don’t fit your business needs are simply a waste of money.
So, first determine what kinds of services you need.
For example, if you’re a budget-conscious startup dependent on local customers, you’ll need a prominent address with local mail pickup. A basic virtual office plan will work just fine.
Alternatively, if you run a client-based business with a high call volume that thrives on in-person meetings and online training, consider a virtual office with ample onsite meeting rooms, high-speed Internet, and a live receptionist service to handle your calls.
2. Develop a customer service plan
Consider what kind of support your customers need from you and how you can leverage a virtual office to align with that.
Many virtual offices can offer live receptionist services to help with calls and basic customer service. They typically offer:
- Live call answering in your company name
- Call screening and forwarding
- Ability to provide basic information about your company
- Message taking in your absence
- Appointment scheduling and calendar management
Some virtual assistants provide additional services such as administrative assistance, sales calls, data entry, marketing support, social media responses, and more.
3. Keep your budget in mind
Before making a purchase, it’s important to know how much you can spend.
A virtual office is a cost effective way to create a local presence, but there is still a monthly cost commitment.
Some virtual office services attract additional fees, such as an initial setup fee and mail forwarding costs, so it’s important to know how these fees are structured.
Read more: Virtual Office Prices | How Much Does A Virtual Office Cost?
Once you know the basic monthly cost and whether you’ll need to account for any extras, take note of the license length.
Most virtual office providers require an initial 6-month term followed by a rolling monthly contract.
Some may offer discounts if you pay for your full term up front. Remember to ask about this before signing on the dotted line.
4. Choose a virtual office provider who covers everything you need
A low monthly cost and easy setup seems attractive.
But dig a little deeper and you might find that your first virtual office choice doesn’t quite live up to your requirements.
Remember, a virtual office isn’t necessarily a short-term solution.
If you plan to use your virtual office address to open a bank account, or market your business, or apply for business licenses, it becomes part of a longer-term growth strategy.
It’s better to spend time choosing the right virtual office, rather than making changes to your business setup later on.
That’s why it’s important to consider what you might need in the future, and whether your virtual office provider can cover these requirements.
For instance, will you need to conduct meetings with clients, investors, or new hires?
If the answer is yes:
- Are there adequate onsite meeting facilities?
- What is the hourly cost of meeting room rental, and does your budget allow for it?
- Are the rooms suitably furnished with a high-speed Internet connection and presentation equipment?
- Is there an onsite receptionist who can meet and greet visitors?
- Is the center easy to reach with nearby parking?
- Does the overall image of the center reflect your own expectations and standards?
These are just some of the considerations you should take into account when choosing a virtual office.
Choosing Your Virtual Business Address
By now, you should have a clear set of expectations for your virtual office.
This should include:
- What you need it for
- Which services you’ll need
- What type of customer service support you need (if any)
- Budget allowance
- What to expect from your virtual office provider
Here’s a rundown of how to choose your virtual office location through Alliance Virtual Offices (other virtual office providers will differ):
- Go to www.alliancevirtualoffices.com
- Type a location into the search box
- You’ll see a list of search results in and around your location. Switch to map view to help narrow down your options.
- Click on any listing to learn more about the virtual office center, including:
- Location and address
- Plans and services available
- Pricing
- Photographs
- Onsite facilities and services
- Local amenities and transport links
- Choose your plan. Alliance Plans include:
- Platinum
- Platinum Plus (inclusive monthly meeting room or office usage)
- Platinum or Platinum Plus with Live Receptionist (includes live call answering, business phone system, and a business phone number)
- When you’re ready to proceed, hit ‘Add to cart’.
- Select your mail option.
- Add your personal, payment, and billing address information, as it appears on your forms of I.D.
- Read and accept the terms of service, then checkout.
- Fill out the CMRA form 1583 (you’ll receive this by email).
- Complete the online notary process. It’s quick and easy, and it’s covered in the one-time setup fee.
- Look out for a confirmation email from Alliance. Then, you’re good to go!
Create a Business Entity
Once you’ve completed the online notary process and received confirmation, you can start using your virtual office right away.
It’s easy to register your LLC with a virtual business address.
If you haven’t already, you can legally create a business entity (like an LLC) using your virtual office address.
This is an important step in your business growth journey.
Among other things, it helps separate your business from your personal assets, given you follow certain guidelines.
Further Reading
Learn more about virtual offices and how it supports your business growth strategy:
