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Updated Dec 20, 2023

Choosing a Business Phone System: A Buyer’s Guide

Learn about the features available and how to select the best system for your business.

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Chad Brooks, Business Strategy Insider Managing Editor
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This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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Selecting a business phone system is a crucial decision that will guide your business’s operations and infrastructure. Your organization needs a reliable communication system to address customer needs, provide high-quality support, contact leads and communicate internally.  

However, selecting the right phone system can be challenging, with numerous factors to consider. We’ll share guidelines on assessing your needs and outline the various options available so you can choose the right business phone system for your organization. 

How to choose a business phone system

Business phone systems have a wide array of features and functionality. The right solution for your business may not be ideal for another organization. As you begin your evaluation and buying process, take the following steps. 

1. Assess your business phone system needs.

Assessing your needs is a crucial first step before you begin the buying process. Consider your business size, the number of remote and in-office employees the system must serve and your location. Additionally, evaluate how soon you need your system up and running. Time constraints can narrow your options to available suppliers in your area.

Your assessment should help point you toward the best type of business phone system for your needs. Several categories exist, including virtual phone lines and voice-over-internet-protocol (VoIP) systems. (We’ll explain more about business phone categories later.) 

Editor’s note: Looking for information on business phone systems? Use the questionnaire below and our vendor partners will contact you to provide you with the information you need.

To get a general idea of the best business phone system for your needs, answer the following questions: 

  • Do you need a comprehensive phone system that includes physical desk telephones?
  • Could your business get by with a virtual phone service that relies on mobile devices?
  • Are you comfortable using a VoIP system, which runs over the internet and is available from many providers? 

Do you want a traditional landline telephone service provided by a local or regional phone company?

FYIDid you know
If you're considering a VoIP system, you'll need to decide if you want to house the system at your business (on-premises) or if you want a cloud-based phone system hosted by a provider.

2. Research the business phone system market.

With a general understanding of your business’s needs, your next step is to research the market to get a short list of suitable providers. Our reviews of the best business phone systems are a great place to start. This information will give you an idea of the broad offerings available and how they differ. After conducting your research, a few providers will likely appeal to you and stand out as contenders.

3. Experiment with business phone system demos and free trials.

Many top business phone system providers offer free trial periods and interactive demos that give you a feel for the platform. Demos and free trials are excellent ways to sample a service without making an immediate investment or commitment. You can do this with a few suppliers to compare and contrast various features and customer service efforts.

4. Get quotes from promising business phone system vendors.

After your free trials and demos, request quotes from top contenders to compare prices. Many suppliers will offer a discount for annual pricing and may charge a higher price for monthly billing. Some have additional fees to consider for specific features, such as extra business phone numbers or extensions. Decide which payment plan best suits your business and its needs.

5. Read customer reviews for business phone systems you’re considering.

Customer reviews can provide valuable insight into which phone system is the best choice for you. Often, reviews share honest information about a company and its services that you can’t find anywhere else. For example, a company obviously won’t list “poor customer service” or “limited features” on its website but a customer review might call out these issues.

When reading customer reviews, pay close attention to frequently mentioned issues or concerns. Don’t settle for a vendor with a bad reputation, no matter how well the company markets itself.

Did You Know?Did you know
Some business phone systems include video conferencing capabilities, making them unified communications (UC) platforms. Read our review of 8x8 to learn about this affordable vendor that can host HD audio and video conferencing with up to 500 active participants.

Types of business phone systems

The most common types of business phone systems you’ll encounter include the following: 

  • Virtual phone systems
  • Landlines
  • VoIP
  • Cloud and on-premises system

We’ll break down each type and share their pros and cons. 

Virtual phone systems

  • Pros: Virtual phone systems help businesses with offsite employees present a professional image at all times. They give remote workers access to various phone system features that mobile and home phones don’t offer. For example, Grasshopper is a top-rated virtual phone system ideal for businesses with remote teams. When you sign up with Grasshopper, you’ll gain phone numbers that are virtual phone lines. Read our review of Grasshopper for more details on how virtual phone systems work. 
  • Cons: Virtual systems aren’t full-fledged phone systems. Your calls are often still processed on your mobile or home phone network. This means you’re charged for the call on the virtual system and use your mobile or home phone minutes. 

Virtual phone systems are extensive call-forwarding solutions that transfer calls to an employee’s cell or home phone instead of a desk phone when a customer calls the main business phone number. These systems also include various helpful features, such as automated receptionists, voicemail, call forwarding, call screening, toll-free numbers and online faxing. 

Best for: Small businesses with remote workers or sole proprietorships.

Did You Know?Did you know
Some virtual services allow you to make calls via an internet connection when using the provider's business phone system mobile app.

Traditional landline systems

  • Pros: Landline systems are a reliable, time-tested solution that many companies are comfortable using.
  • Cons: Most phone system providers are moving away from landlines, making them more challenging to purchase and repair. It’s only a matter of time before these systems become obsolete.

Landlines are traditional phone systems; a local or regional phone company typically supports them. Also known as public switched telephone networks, landlines are analog systems that run via the telephone company’s traditional copper wiring. You need on-premises private branch exchange (PBX) hardware to run a landline service. This hardware can create multiple extensions and provide phone system features like call transferring and call directories.

Today, some landline systems are considered hybrids with VoIP systems. A traditional phone line connects to a business’s data network, which it uses to connect each phone. Many phone system providers are phasing out landline systems, so finding one that still offers this service might be challenging.

Best for: Large corporations that have the budget for them and in-house information technology (IT) staff to manage and maintain them; necessary for businesses without high-speed internet access

VoIP phone systems

  • Pros: VoIP provides a sophisticated phone system with all the bells and whistles. These systems are easy to set up and configure and significantly cheaper than landline ones. For example, Ooma Office is intuitive, feature-full and easily implemented. Read our in-depth review of Ooma Office to learn more about how this VoIP provider works.
  • Cons: These systems rely on your internet connection. If you’re in a community with spotty internet service, this type of phone system won’t work for you.

Instead of the copper wires that landlines run on, VoIP business phone systems use a business’s established internet connection. VoIP systems provide a feature set that previously only large corporations using expensive PBX hardware could access, including automated attendants, call queues and computer integration, which allows voicemails to be sent to email inboxes and computers to be turned into softphones. They also give remote workers access to the business’s phone system from their mobile devices.

If you decide a VoIP system is best, your next step is to decide how you want it hosted (see below). While landline systems require you to house the equipment at your business, VoIP systems allow you to buy your equipment outright and self-host or rent the equipment from your service provider, who hosts it in the cloud.

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

Consider your priorities when deciding between landline and VoIP phone systems. VoIP is likely the better choice if you need flexibility, scalability and cost efficiency.

On-premises VoIP systems

  • Pros: You are always in control of your service. You and your IT team ensure it is up and running and configured how you like.
  • Cons: There is a significant upfront cost because you must buy all the equipment. Additionally, you need someone on staff who can service and maintain the system.

With on-premises systems, all the equipment, including the PBX hardware to keep the phone system running, is housed within your business. On-premises systems require a significant capital expenditure because you purchase the equipment upfront. 

While you pay one-time fees for all the hardware with a self-hosted system, with an on-premises system, you pay monthly fees for your Session Initiation Protocol trunking or primary rate interface circuit, which allows you to make and receive calls. Your IT staff is responsible for system maintenance, repairs and upgrades.

Best for: Businesses that don’t feel comfortable using the cloud and want total control over their system and access to the equipment at all times; businesses with an in-house IT team that can set up and maintain a VoIP system; businesses with regulatory or compliance requirements that may be difficult to meet in the cloud.

Cloud-based VoIP systems

  • Pros: There is no PBX hardware or dial-tone service to purchase and maintain. Your provider takes care of all that for you. You can set up and configure the system for your business from your computer. For example, RingCentral is a robust cloud-hosted VoIP solution. Check out our detailed review of RingCentral to learn how it works.
  • Cons: You aren’t in control of the hardware. If the system goes down, you must rely on your provider to fix it as quickly as possible. 

With cloud-based business phone systems, there is no maintenance or hardware other than phones to worry about. The service provider houses, maintains and upgrades the PBX technology for you. The cloud allows growing businesses to add new lines easily and provides quick access to new features. Businesses typically pay a monthly fee on a per-user basis.

Best for: Growing businesses on a fixed budget with no IT staff to operate and maintain PBX hardware; businesses that want quick access to new phone system features or have multiple locations and want their system all on one platform.

Key TakeawayKey takeaway
If you're wondering which cloud-hosted business phone system is right for your organization, read vendor reviews, assess free trial offers and speak to other small business owners in your industry.

Business Phone System FAQs

Consider the following frequently asked questions about business phone systems to help you choose the right vendor, plan and setup.
Yes. Much of a business's success depends on how it presents itself, so all businesses can benefit from a professional phone system. For example, customers should be able to reach your business; an automated attendant helps funnel calls to the right department or person. Businesses that can't afford a full-fledged phone system can still present a professional image using a virtual system.
It's possible to use your mobile phones if you invest in a virtual phone system. These systems allow you to use your mobile device and still present a professional image. However, using your mobile line without a virtual system presents a few issues. First, it doesn't convey a professional image to your customers. Second, mobile lines don't provide the features and tools that small businesses find most valuable, such as voicemail to email, call forwarding, call screening, music on hold and online faxing.
The problem with landline systems isn't their functionality as they still operate at a high level. The biggest issue is that new options are no longer being built, no new technology is being developed and no new software upgrades are forthcoming. You won't have access to many new features and capabilities. Additionally, finding experts to provide customer service and support for these systems ― and the parts to keep landline systems up and running ― is increasingly difficult. At some point, likely in the near future, new features for VoIP systems won't be compatible with landline systems. Depending on the feature, that could very well put your business behind the eight ball.
The decision comes down to your resources. You must consider your budget, whether your business is growing, whether you have an IT staff capable of running and maintaining an in-house phone system and whether you have access to a high-speed internet connection. When choosing a phone provider for your small business, finding a service with the features and tools you want in a phone system is crucial. You must also ensure your provider offers an acceptable level of customer support. If you're considering a cloud-hosted system, uptime is a crucial factor. When the system is down, you won't have access to your telephone services. The best providers have numerous data centers worldwide to minimize downtime. When speaking with different providers, ask about their uptime stats and whether they have any money-back uptime guarantees.
There are some upfront costs with cloud-hosted phone systems. You will most likely pay for IP phones ranging from $50 to $600 each. Some providers also charge setup and training fees.
Many cloud phone system providers offer businesses the option of using a shared server or paying extra for a dedicated server. This decision depends on your preferences. Do you want the system solely devoted to you or do you want to buy it as a service on the same platform the provider offers to everyone else? Smaller businesses without many special requirements and customizations typically are comfortable using a shared service. Large organizations with complex needs likely prefer a dedicated server that provides the high-quality service and privacy they want.
While some users might be concerned about the sound quality of a VoIP system, the technology has come so far that it's virtually impossible to tell the difference between landline and internet-based calls. To ensure call quality is clear and robust, your business must be conscientious about how you set up your data network. You must ensure you have enough capacity to handle your call volume and that your network is set up to prioritize voice calls over other types of internet traffic. What types of features are available in a VoIP phone system? While feature-rich phone systems were previously used only by large corporations, today's VoIP options give small businesses the same benefits. Here are some of the calling and collaboration features you may find most beneficial:
  • Voicemail
  • Voicemail to email
  • Voicemail to text
  • Voicemail transcription
  • Call forwarding
  • Call recording
  • Call queues
  • The option of both local and toll-free numbers
  • Interactive voice response
  • Conference calling
  • Automated attendants
  • Extension dialing
  • Ring groups
  • Directory assistance
  • Call transferring
  • Internet faxing
  • Call reports
  • Call monitoring
  • Missed-call notifications
  • Video conferencing
  • Online meetings
  • Instant messaging
  • Text messaging
  • Integrations with popular programs, such as Microsoft Outlook, Salesforce and Google tools
  • International calls
VoIP technology allows employees to take and make business calls from anywhere without needing a business-dedicated mobile phone. Business VoIP systems offer smartphone applications and mobility features that give employees the full functionality of their desk phones anytime, anywhere.
In today's age of remote workers and flexible work arrangements, it's critical that employees can be reached at all times, regardless of where they are. You don't want your customers to have to hunt down your employees when they need them or, worse, be unable to reach them. Mobility ensures that your employees are always reachable. It also allows them to be connected without sharing their personal phone numbers.
Many of today's phone systems are UC systems. These systems combine voice calling, messaging and video or online meetings into one service. They also offer audio conferencing and online faxing. Many of today's phone system providers offer these services on their platforms. Solutions that aren't UC systems only offer voice calling and related features.
While both on-premises and hosted systems can support organizations with multiple locations, a cloud-hosted solution can simplify things. Cloud-hosted systems don't require you to install complex PBX equipment inside each location. This allows easier setup and can also save you money. Cloud-hosted systems can be managed from one online platform, making using them easy.
There are few limitations on the number of phone lines your business can access. Typically, the more lines you have, the cheaper your per-user cost is. Moreover, adding new lines is a simple process. With on-premises systems, you must do actual work on your equipment to install new lines. With cloud-hosted systems, you can add a new line in seconds straight from your computer, creating a multiline phone system easily.

Choosing the right business phone system

Deciding on the right phone system for your business can feel intimidating as there are many types of systems from which to choose. When deciding which to invest in, consider your unique business needs, desired features and price range. You can always select a free trial or demo to ensure the supplier is the right fit.

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Chad Brooks, Business Strategy Insider Managing Editor
Chad Brooks is the author of How to Start a Home-Based App Development Business. He has spent more than 10 years guiding prospective entrepreneurs and business owners on the ins and outs of launching a startup, scaling a company and maintaining profitable growth. Within the world of entrepreneurship, he is particularly passionate about small business communications tools, such as unified communications systems, video conferencing solutions and conference call services. Brooks, who holds a degree in journalism from Indiana University, has lent his business expertise to a number of esteemed publications, including Huffington Post, CNBC, Fox Business and Laptop Mag. He regularly consults with B2B companies to stay on top of the latest business trends and direct growing enterprises toward the modern-day business technology required in today's digitally advanced world.
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