The Best Phone Systems for Small Business

What is a business phone system?

A business phone system is a multiline phone system that often includes such features as unlimited calling, automated menus, ring groups to call multiple employees simultaneously, voicemail-to-email functionality and call recording. Types of business phone systems include Voice over Internet Protocol (VoIP), private branch exchange (PBX) and key system unit (KSU). The best phone systems for small business use VoIP technology, which allows you to use your business internet connection for the whole system.

The Best Business Phone Systems

• Dialpad
• Nextiva
• 8×8
• RingCentral
• Ooma
• Zoom
• Vonage
• GoToConnect
• net2phone
• Windstream
• Grasshopper

• Small businesses that need phone, video, chat, SMS and fax are turning to cloud-based business phone system providers that offer all-in-one unified communications via the internet.
• Most cloud-based service providers offer great call quality and reliability with uptimes of 99.999% and higher.
• Business owners should look for communications platforms that integrate with the other productivity tools and CRM software they currently use.
• This article is for business owners shopping for a new business phone system for unified communications.

VoIP, or cloud-based, phone systems have largely replaced traditional landlines in business settings. Today’s modern phone service providers offer unified communications across phone, video, chat, text and fax with key software integrations that help companies make better use of every conversation that takes place. While some systems offer SIP trunking to integrate with older on-premises telephone hardware, most service providers work exclusively through the cloud with no hardware required to facilitate calls. Calls can still be taken on a traditional-looking IP desk phone, but most users opt for a headset with a desktop application or simply their mobile device. Today’s best business phone systems offer a wealth of call management tools, with virtual receptionists, advanced call routing, custom business hours and many other helpful features to ensure that calls are never sent to a voicemail box when someone’s available to answer.

A business phone system typically costs between $15 and $50 per user per month, depending on the features and level of service. In many cases, advertised prices are listed with the assumption of an annual payment plan for a significant number of users. Generally speaking, the per-user price declines by as much as 25% for larger businesses purchasing many accounts and committing to an annual contract. Small businesses with fewer than 10 employees should pay special attention to advertised pricing that often preselects a plan with more than 20 users and annual payment pricing, which may not reflect what’s actually available to them.

Some providers, such as Zoom, offer pay-as-you-go “metered” pricing for calling and messaging, but this arrangement is rare. For most service providers, unlimited calling to the U.S. and Canada are included, with additional per-minute fees for international calls that vary by provider and region. 

Many providers are able to lower their monthly prices by replacing standard features with piecemeal add-ons. For many businesses, this is an excellent way to reduce costs by skipping features, such as call recording, that may not be used by everyone. Other businesses use add-ons to design a customized phone system that’s perfectly suited for their long-term goals. While some service providers allow businesses to mix and match plans to support different employees effectively, most providers do not offer this level of flexibility.

Finally, most business phone providers sell and rent preconfigured IP desk phones and other telephone hardware that range in price from $60 to $400. However, desk phones are never required to use a cloud-based phone system. 

There are multiple factors to consider when choosing a business phone system. First and foremost, you want to ensure that the system has all the functions and features your business needs. Can it support the number of employees who need the service? Does it have all of the features your business relies on or would benefit from?

While some businesses want only standard calling features like caller ID and voicemail, others want added functions, like ring groups, an automated attendant and on-hold music. Also consider any other communication tools your business needs. Are you strictly looking for a system that allows you to talk over the phone, or are you in the market for more of a unified communications system that adds functions like video conferencing and instant messaging? Your answer to this question will guide you in your search for a new business phone system.

Another factor to consider is a business phone system’s reliability. A phone system is no use if it isn’t up and running when you need it. This is especially important for a cloud-hosted solution. Ask each provider what its annual uptime percentage is. If it isn’t 99.999%, find out what the company is doing to correct the issues and increase its reliability. Also ask about its service-level agreements and if the contract has any uptime-related clauses. Many business phone system providers will reimburse customers if the system doesn’t meet a certain uptime percentage.

If cloud-hosted systems aren’t a good fit for your business, you need a phone provider that offers on-premises systems. With an on-premises system, your business houses all the equipment onsite instead of via cloud-hosted PBX. These systems have more upfront costs, but not many of the ongoing monthly fees that cloud-based systems have.

Very small businesses may want to consider whether they need a true phone system with onsite desk phones. Businesses that can get by with mobile phones may want to look into a virtual phone system instead. These systems connect a main business number to employees’ mobile phones. When someone calls the main business number, they are greeted by an automated attendant that can transfer them to a specific employee or department. The call is transferred to the appropriate employee’s cell phone instead of a traditional office phone. In addition to being well suited for very small businesses, a virtual phone system is also a great fit for businesses with a large remote workforce as well as solo entrepreneurs.

Finally, consider which types of customer support the phone company offers. If you don’t have a full-time IT manager for your business or employees who can handle issues, you’ll want a business phone system provider that will be available to answer questions when you have them, preferably through multiple channels and online resources.

Businesses in need of a multiline phone system have several options. The choices vary based on where the equipment is housed, how the connections are made and the cost structure, among other criteria. [Get more details on four-line phone systems.]

The equipment that provides the functionality to make and receive calls is a PBX. PBX technology, whether housed onsite at a business or in the cloud, is what gives businesses all of the features and tools unified communications systems offer, such as automated attendants, call queues and ring groups.

Landline

Landline phone systems use traditional phone system connections and wiring provided by local and regional phone companies. These systems require onsite PBX equipment that your in-house IT team maintains and upgrades. These systems also require a large upfront capital expenditure for all of the PBX equipment. However, landline systems are falling by the wayside as more and more phone system providers are no longer making equipment to support this model.

VoIP

Instead of using traditional copper wiring connections like landline systems do, VoIP systems rely on internet connections to facilitate calls. This allows you to run your phone system through the same internet connection your company uses to go online. [Related article: Why VoIP for Business Makes Sense] There are two types of VoIP systems: cloud and on-premises.

• Cloud-hosted VoIP: Cloud-hosted phone systems house their PBX equipment in the cloud. This means the phone system provider is responsible for maintaining and upgrading it. To use a cloud-hosted system, all you have to do is plug your business’s configured IP phones into your local area network. These systems don’t typically have any upfront costs. Instead, businesses pay a monthly per-user fee. Costs usually range from $15 to $60 per user per month.
• On-premises VoIP: These systems are similar to landline systems in that the PBX equipment is housed inside your business. You are required to handle all of the maintenance. The difference is that these systems still facilitate calls via an internet connection rather than a landline. This gives your business more control over how the phone system operates and allows you to install any security measures you want. On-premises VoIP systems require a large upfront capital investment, though, as well as smaller monthly fees to cover the required connections for making and receiving calls.

Virtual Phone System

Another option for businesses is a virtual phone system. These systems don’t require any equipment – not even office phones. A virtual system works as an extensive call-forwarding tree. You set these systems up so all calls to your main business number are automatically routed to your employees’ mobile phones. You have total control over where the calls are routed and in what order. These systems charge monthly fees only.

Today’s business phone systems offer dozens of valuable features for small businesses. This is perhaps the greatest benefit of cloud-hosted systems: They have opened the door for small businesses to access a multitude of features without having to spend a ton of money. Previously, only larger businesses could afford feature-rich systems because of the capital required to install the necessary equipment.  

• Unlimited calling: Many of today’s cloud-hosted VoIP phone systems include unlimited domestic calling for no additional charge. This gives you a fixed cost for the monthly service that doesn’t fluctuate based on how many calls your business makes and receives.
• Automated attendants: An auto attendant answers calls made to your business and routes calls to the proper employees or departments.
• Ring groups: This feature allows you to group employees so that, if someone calls needing someone in that group, such as customer service, all of the employees’ phones will ring. You can choose for phones to ring in a specific order or all at the same time.
• Voicemail: In addition to traditional voicemail service, many business phone systems offer voicemail-to-email functionality. This feature sends audio recordings or transcriptions of voicemails to an employee’s email inbox so they can read or listen to their messages even if they are away from the office.
• Call recording: This gives you the ability to record calls. These recordings are then stored in the cloud or on your computer for playback later.

Other valuable features many business phone systems offer include extension dialing, call forwarding, call queues, and integrations with services like Microsoft Office and Google Workspace.

These systems also offer features that can boost a business’s collaboration abilities, such as video conferencing, instant messaging, presence indicators and online meetings. 

Unified Communications Solutions

Today’s business phone systems offer much more than a way to make and receive phone calls. Many of today’s solutions, including some of our best picks, are unified communications systems.

Instead of focusing solely on a business’s calling needs, unified communications systems support all of the ways employees now communicate with customers, clients and co-workers. This encompasses traditional phone calls, audio conferencing, video conferencing, instant messaging, online faxing and text messaging.

Many of these components used to be provided by different vendors. For example, a business might have had one provider for its phone system, another for conference calling and a third for video conferencing. Unified communications systems tie all of those into one platform.

• Phone calls: This is a traditional phone service that allows employees to make and receive calls. Most providers offer both local and toll-free numbers.
• Conference calling: Unified communications systems include a conference bridge that allows you to host your own conference calls. The number of people who can be on a call at one time depends on the provider. Some systems support five to 10 people, while others allow for hundreds of people at one time.
• Video and web conferencing: You and your employees can host video meetings with video conferencing hardware or through a computer equipped with a camera and microphone. Most of these services allow for screen sharing, which lets everyone in the meeting view documents or presentations. The number of participants who can be on a video call at one time varies by provider. It could be just a handful or as many as 100.
• Instant messaging: Many unified communications systems have instant messaging. You and your employees can send messages back and forth to ask questions and collaborate on projects.
• Text messaging: Since texting has become so popular, some solutions allow you to send text messages from your business line. This allows you and your employees to send text messages to customers without revealing your personal numbers.
• Faxing: These systems allow you to send online faxes rather than using a dedicated fax machine. You can send a fax to a recipient’s email or fax machine from the platform.

Having all of these tools on one platform can make communication much easier for employees, making them more productive.

Cloud-hosted systems have really driven the expansion of unified communications systems. Instead of paying tens of thousands of dollars for an on-premises system that houses all of these features, you can get all of this through a cloud-hosted service for a low monthly per-user fee.

Modern business phone systems offer all of the advantages with practically none of the disadvantages of older landline systems, which require expensive on-premises hardware to purchase and maintain. Today’s cloud-based business phone systems also do far more than make calls. They support video conferencing, team messaging, SMS and online faxing, and they offer integrations with popular business software and CRMs to properly manage customer data and communications across the entire business.

Flexibility is another area where business phone systems have evolved, allowing employees to take calls on any internet-connected device, including computers, laptops, tablets, mobile phones and IP phones, that has the same functionality as a traditional-looking desk phone. Businesses can send inbound calls to all devices at one time or set up ring groups that dial specific teams or employees with a simultaneous or sequential ring setting to ensure all inbound calls are properly routed and received.

While some traditional landline users may fear poor quality due to a bad internet connection, the reality is that cloud-based phones are on par with landline systems in terms of audio quality and reliability. The majority of business phone system providers offer uptimes of 99.999% and higher with service-level agreements. As part of their analytics tools, many providers also include quality-of-service reporting, which details the level of quality for every call that’s made. With a lower monthly cost, no hardware to manage and an impressive list of call management tools, a cloud-based business phone system is a very compelling option for many business owners and managers.

Which kinds of businesses benefit most from a good phone system?

All businesses can benefit from a good phone system, though not all businesses will benefit from the same type of business phone system. Communicating with your customers and clients in a professional manner is critical. That’s why relying strictly on mobile devices can cause problems. You want to make a great impression on your customers. A greeting from an automated attendant is a great first step; it shows that your business is a legitimate operation.

That’s why businesses that don’t need a traditional office phone system should consider investing in a virtual phone system. These systems allow businesses to present that professional image while still relying on their mobile devices as their main communication tools. Virtual systems include automated attendants and a host of other valuable features. In addition, when you make outbound calls, your business number, not your mobile number, is displayed to the person you are calling.

For larger businesses, business phone systems not only allow you to present a professional image to your customers, but they also give your employees all of the communication tools they need to do their jobs. Access to mobile apps, which allow your employees to take their business lines with them wherever they go, and video conferencing services ensure that they can connect with anyone, regardless of where they are and how they want to communicate.

What is unified communications?

Unified communications is the ability to access all of your communication tools from one platform. Many of today’s business phone systems are unified communications systems. While these systems still offer traditional phone service, they include other communication tools that professionals now rely on.

The additional features in unified communications services include audio, video and web conferencing; instant messaging; and text messaging. Previously, in order to have all of these communication tools, organizations had to use a different service provider for each tool. Unified communications streamlines the process by allowing you to access all of these features from the same provider. This not only boosts employee productivity, but it can also be a significant cost-saver for businesses.

What is the best business phone system?

Since every business is different, it is hard to say that one business phone system can fulfill everyone’s needs. That’s why our recommendations for the best business phone systems are based on different use cases, like best for small businesses, best for remote employees and best for call centers.

For each use case, we examined the functions and tools that different business types need from a phone system. We then compared and contrasted the various phone system providers based on those criteria.

You can read specifics on each selection in our in-depth reviews.

When is the best time to invest in a good phone system for your business?

In today’s highly competitive market, it’s never a bad time to invest in a business phone system. There are so many providers seeking new customers that they are always offering some type of discount or incentive to sign up. This could be a few months of free service, free phones or discounted rates.

That being said, we have noticed that a lot of providers seem to ramp up their incentives near the end of each quarter. As they close their books on the quarter, providers want the best numbers possible, so they may offer extra incentives to get more clients. You might want to consider this before you start talking to providers.

What is the difference between a business phone service and a business phone system?

There aren’t many differences between a business phone service and a business phone system. Both provide you with all the tools you need to effectively communicate with those inside and outside of your office. 

When you are evaluating which one is best for your business, you want to look at how well the system runs. Is the phone service reliable? This is especially important for cloud-hosted PBX systems. Traditionally, business phone services were based on landlines. Reliability was rock-solid because everything was hardwired and you weren’t dealing with the internet. Today, as cloud-hosted PBX business phone systems become increasingly popular, finding a business phone service that offers the same reliability as a landline system has become crucial.  

One of the key factors to determine reliability is uptime statistics. Uptime is how often a cloud-based phone system is up and running. One of the most important elements of a business phone system is that you can pick up the phone and make a call whenever you need to and that whenever someone is calling you, they can get through. The best business phone services and systems have uptimes of 99.999%. This means that service is down for a handful of minutes each year. Some business phone service providers go as far as to guarantee their uptime – if it ever falls below a certain threshold, they will reimburse you.

What are the main differences between phone systems for small businesses and phone systems for large businesses?

What makes today’s cloud-hosted unified communication systems so appealing to small businesses is that they provide the same functionality as systems that large businesses use.

Before the advent of VoIP and cloud-hosted solutions, large businesses were typically the only ones that could afford the expensive onsite equipment for a robust phone system with features like automated attendants, extension dialing and call queues.

VoIP, specifically cloud-hosted VoIP phone systems, has leveled the playing field. There is no longer an expensive point of entry, so small businesses can easily implement these systems in the same way large businesses can.

One difference might be the service tiers that small and large businesses choose. While small businesses might choose a lower-tier plan that doesn’t offer every feature under the sun, larger businesses may be able to afford the more expensive plans that give them access to everything the phone system provider offers.

How much does a phone system cost for small businesses?

The cost and the pricing structure of a small business phone system are determined by where the system will be hosted. If it is hosted in the cloud, all you have to worry about are ongoing monthly fees for each user. Prices are typically $10 to $60 per user per month, depending on how many features and tools you want.

If you want to host your business phone systems on-premises (inside your physical business location), you need to plan for one-time upfront costs. For all of the equipment and installation, you can expect to pay several thousand dollars. In addition, there will likely be recurring monthly payments for your actual calling services. 

How do you set up a small business phone system?

A huge benefit of today’s business phone systems is how easy they are to set up. VoIP systems are completely managed from an online portal. Administrators can log in to the portal to assign business phone numbers and extensions, add new users, delete users, and turn features on or off for individual users. You can access this portal from anywhere with an internet connection.

Who benefits most from VoIP office systems?

Employees are the ones who can benefit most from a VoIP business phone system. These systems provide employees with tools to facilitate all of their communication and collaboration needs. Voicemail-to-email, call recording, instant messaging and call forwarding are some of the valuable tools employees can access.

Additionally, VoIP systems allow lots of mobility. Many offer their own mobile apps that give workers the freedom to answer and make calls to and from their business lines via their mobile devices. This helps ensure that they never miss an important call.

Small business owners also are huge beneficiaries of VoIP office systems. These systems give small businesses access to features and tools that were previously affordable for only larger organizations. The ability to install these systems for a relatively low price is a huge advantage for small businesses.

Can you use a VoIP phone as a regular phone?

Technically, there are IP phones and analog phones. Most of today’s VoIP phone systems use IP phones. These phones plug directly into your internet router and are essentially ready to start making and receiving calls immediately.

In order to use an analog phone with many of today’s VoIP systems, you need a special adapter that allows these phones to connect to your network.