Choosing a Business Phone System: 2015 Buyer's Guide Credit: Lane V. Erickson/Shutterstock

If you’re looking to buy a business phone system, there are three important things you need to figure out:

1. Do you need a full phone system that includes physical telephones or could your business get by with a virtual phone service that uses cellphones instead of traditional office phones?

2. If you do need actual telephones, what kind of service do you want? You will need to choose between a traditional landline telephone service provided by a local or regional phone company or a system that runs over the Internet (Voice over Internet Protocol or VoIP)?

3. If you choose VoIp, do you want to house the VoIp system at your business location (self-hosted) or have it hosted in the cloud (cloud-based)?

We will help you answer those questions below, but if you already know what you need and just want to see our recommendations for the best business phone systems, visit our best picks page.

If you're not sure yet, read on. We'll fill you in on the benefits and costs of each of the following types of phone systems below:

  • Virtual Phone Service
  • Landlines
  • VoIP
  • Self-hosted VoIP
  • Cloud-based VoIp

Fill out the form below to get business phone system information and quotes directly from vendors for free:

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Virtual phone system

  • Virtual phone systems work by connecting a business phone line to remote workers on their cellphones or home phones.
  • These types of systems work as an extensive call-forwarding solution, wherein calls are transferred to each employee's designated phone – cell or home – when a customer or client calls the main business number.
  • These systems include a variety of features, such as automated receptionists, voicemail, call forwarding, call screening and online faxing.

Pros and cons: This type of service allows businesses with employees working from all different locations the opportunity to present a professional face at all times for a cheap cost. It also gives remote workers access to a variety of phone system features that cellphones and home phones don't offer. The downside is that they aren't a full-fledged phone system. Your calls are still being processed on your mobile or home phone network This means you are being charged for the call on the virtual system and using up your mobile or home phone minutes.

What the experts say: The benefits are in the management, ease-of-use, feature availability, and affordability," said Evie Goldstein, public relations manager for RingCentral. "There is no capital expenditure needed, and it can be managed by someone with limited technical expertise. Because of this, small companies are afforded the ability to possess enterprise level functionality with a small business price tag."

Best for: Businesses that are comprised solely of remote workers or sole proprietor businesses.

Landline

  • This is the  traditional phone system that you are likely most familiar with, which is usually supported by your local or regional phone company.
  • Landlines, also known as public switched telephone networks (PSTN), are analog systems that run via the telephone company's traditional copper wiring.
  • To run landline service, you need on-premises PBX hardware. This is the hardware that's used to create multiple extensions and allow for phone system features, such as call transferring and call directories.

Pros and cons:  Landline systems are a reliable, time-tested solution that have infrastructure in place and that many companies are comfortable using.However, many small businesses are moving away from these systems due to their costly nature and required maintenance.

What the experts say: "On-premise PBX infrastructure is expensive to maintain and quite often requires scheduled site appointments to resolve problems, add features, etc.," Aaron Charlesworth, vice president of marketing and product management for Vonage Business Solutions, said.  "Based on the expenses of maintaining the landline system, cost of service may even be a more significant drawback than the lack of features."

Best for:These systems are typically best for large corporations that have the budget to pay for it and an in-house IT staff to run and maintain it

VoIP phone systems

  • Rather than using the traditional copper wires that landlines use, VoIP phone systems use the same Internet connection that a company is already using to get online.
  • VoIP systems provide features that previously only large corporations had access to, such as automated attendants, call queues and computer integration that allows voicemails to be sent to email inboxes and laptops or desktop computers to be turned into "virtual phones."
  • VoIP systems provide mobile options that give remote workers access to a business's phone system from their smartphone.

Pros and cons: VoIP systems provide you with a sophisticated phone system complete with all the bells and whistles imaginable. These systems are easily set up and configured and are significantly cheaper than landline systems. The downside, however, is that these systems are reliant on your Internet connection. So, if your Internet connection were to go down, so, too, would your phone service.

What the experts say: "In most cases these types of advanced capabilities were available only to larger businesses and enterprises that could afford to maintain the necessary infrastructure," Aaron Charlesworth, vice president of marketing and product management for Vonage Business Solutions, said of the VoIP features.

Best for: These systems are best for small businesses that want the functionality of a sophisticated phone system at a reasonable price and for businesses that want their remote employees to have access to the phone system.

If you decide that a VoIP system will fit your needs, you now have another decision to make. While with landline systems you are forced to house all of the necessary equipment inside your business, you don't have those same limitations with VoIP. With VoIP systems you have the option of buying your equipment outright and self-hosting it all or in essence renting the equipment, which is housed in the cloud.

Self-hosted VoIP System

  • A self-hosted, or premises-based, system means that the business pays for and owns the equipment, most notably the private branch exchange (PBX) hardware that is needed to keep phone systems running. 
  • A PBX system is the hardware that allows circuit switching within an organization's phone system.

Pros and cons: The benefit of a self-hosted system is that you are always in control of your system. You are only relying on yourself to ensure it is up and running and configured how you like it. The flipside, however, is that these systems require more of an upfront cost, since you have to buy all of your equipment. Additionally, you need someone on staff who is capable of servicing and maintaining the system.

What the experts say: "Whether your current business priorities are related to cost control, business growth or compliance and regulation requirements, a self-hosted phone system can help any company prioritize what’s important," said Pej Roshan, vice president of product development for ShoreTel. "An onsite system gives IT teams more control over administration and upgrades, with the ability to customize applications while also more easily integrating with existing CRM and ERP applications."

Best for: Businesses that don't feel comfortable using the cloud and want total control over their system and access to equipment at all times.

Cloud-based VoIP System

  • With cloud-based systems, there is no maintenance or hardware to worry about. The service provider handles all the technology.
  • The cloud offers growing businesses the opportunity to easily add new lines.
  • Businesses typically pay a monthly fee on a per user basis.

Pros and cons: With cloud-based systems there is no hardware to purchase and maintain. Your provider takes care all of that for you. You can set up and configure the system for your business all from your computer.The downside of a cloud-based system is that you aren't in control of the hardware. If the system goes down, you are reliant upon your provider to get it fixed as quickly as possible.

What the experts say: "We provide you with the phone numbers and we provide you with the hardware," David Lee, vice president of product management for RingCentral, said of the cloud systems. "You [just] pick a [feature] tier and pay per user."

Best for: Growing businesses on a fixed budget that don't have an IT staff to operate and maintain PBX hardware.

Now that you've got the basics, you might be ready to make some decisions. If so, check out our best picks for business phone systems.

Still not sure if you even need a business phone system or if VoIP is a fit for you? No problem. Here are 10 questions and answers that may help you come to a decision.

Q: Do I need a phone system?

  • A: The simple answer to this question is yes. Since so much of a business's success depends on how it presents itself, all businesses can benefit from some sort of business phone solution.

"We believe that no matter the size or type, every business should have the tools and solutions needed to present themselves in a professional manner, while maximizing their ability to work efficiently and stay connected to customers and co-workers," Jim Gustke, vice president of marketing at Ooma, a provider of business phone systems, told Business News Daily.

Q: Can't my employees and I just use our smartphones for business purposes?

  • A: While a one-person operation may be able to get away with using their smartphone, not having a business phone system makes it much more difficult to present a professional image.

"While it may be intuitive, mobile phone plans are simply not set up to offer the same business features that specifically designed business phone systems offer," Gustke said. "For example, mobile phones can't offer a virtual receptionist to answer calls and quickly and easily connect customers with the proper company contacts, or provide important business information like hours and directions."

Q: How do I know which phone system is right for my business?

  • A: The decision really comes down to the resources you have available. You need to consider your budget, whether or not you are growing business, whether you have an IT staff that is capable of running and maintaining an in-house phone system, if you have access to a high-speed Internet connection.

Q. Which businesses are best suited for self-hosted systems?

  • A: Most likely, large companies will continue using some form of self-hosted system, whether it is a landline or a VoIP system.

"Very large enterprises are likely to continue using the more traditional on-premises approach because they have the existing personnel and infrastructure that make the maintenance of the necessary hardware and system economically feasible," Charlesworth said.

Q. What types of businesses are cloud-based solutions a best fit for?

  • A: Cloud-hosted business VoIP systems are ideal for almost any small to mid-size business with high-speed connectivity and an interest in a deeper business feature set at a better price

"With the lower cost structure and the abundance of business-class features, VoIP systems can provide a boost for aspiring SMBs," Charlesworth said.

Q: Is the connection on a VoIP system as good as on a landline?

  • A: While some might be concerned about the quality of a VoIP system and how it sounds, the technology has come so far that it's nearly impossible to tell the difference between landline and Internet-based calls.

"It's highly comparable, if not better," Lee said of VoIP systems. "A lot of carriers have switched to VoIP- based systems and most folks can't tell the difference."

Q: With a VoIP system, will I have access to my phones if my Internet connection goes down?

  • A: Many VoIP systems are now implementing steps to ensure you can still receive calls even if your Internet goes down or your power goes out. Vonage Business Solutions system offers a "Call Continuity" feature that automatically reroutes calls to an alternate number, such as a cellphone, in the event of a power outage or loss of Internet.

Q: What types of features are available in a VoIP phone system?

A: While feature-rich phone systems were previously only available to large corporations, today's VoIP options give small businesses the same benefits. Here are some of the features you may find most beneficial.

  • Voicemail
  • Voicemail-to-email
  • Voicemail transcription
  • Call forwarding
  • Call recording
  • Call queues
  • The option of both local and toll-free numbers
  • Interactive Voice Response
  • Interoffice instant messaging
  • Conference calling
  • Automated attendants
  • Extension dialing
  • Ring groups
  • Directory assistance
  • Call transferring
  • Internet faxing
  • Call reports
  • Call monitoring
  • Missed call notifications
  • Integrations with popular programs, such as Microsoft Outlook, Salesforce and Google.

Q: What access do remote employees have to a business phone system?

  • A: VoIP technology gives employees the freedom to take and make business calls from anywhere without the need for a business-dedicated cellphone. Business VoIP systems offer smartphone applications and mobility features that give employees the full functionality of their desk phones anytime, anywhere,

"Mobility tools sync them seamlessly to the main office, with caller ID registering each outbound call as originating from the main office," Charlesworth said.

Q: Why do I care if my employees can access the phone system when out of the office?

  • A: These mobility features are helping employers show that their employees are always there to take care of their customers' needs. While previously employees could use their personal cellphones to speak with clients when they were away from their desk, business phone system mobility tools allow workers to have that same reachability without having to give out their private numbers when they want to be contacted outside the office, according to Lee.

"It allows you to represent yourself with your business identity," he said.

Now that you know the types of phone systems available and what each offers, you  need to determine which provider is best for you. To help you narrow down your choices, we would encourage you to check out our best picks for various types of businesses, as well as our complete vendor list if our suggestions don't fit your needs. A roundup of our best picks, our reasoning for picking each, and our thorough business phone system provider list can be found here.

Here's a breakdown of our complete coverage:

Fill out the form below to get business phone system information and quotes directly from vendors for free:

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