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What is a Virtual Office? Meaning and How to Start Yours

5 min read • Mar 06, 2021 • Derek Miller

COVID-19 might have hastened remote work across the globe, but some companies have been conducting business virtually for years. Studies estimate that 16% of companies operate remotely 100% of the time—meaning they have no physical office space or brick-and-mortar location. 

Even without a physical office, these businesses—and their employees—still need to present themselves professionally. Additionally, some neighborhood associations prohibit registering business addresses in residential buildings, which limits flexibility for work-from-home entrepreneurs. Fortunately, there’s the option of creating a virtual office.

Learn more about this modern workplace and how it can help your business.  

What Is a Virtual Office?

A virtual office is a physical address for a business that has a 100% remote workforce. The company that rents a virtual office will get a mailing address, a phone number, and other perks that allow it to operate as a full-fledged company. 

Virtual offices are often offered by coworking companies and other professional development organizations. For example, a local coworking space might have 30 desks for customers to rent but provide virtual services for another 50 businesses. With these virtual services, businesses are allowed to use the coworking space as their mailing address—and the coworking organizers will accept mail on behalf of the business. 

Many coworking spaces also offer tiers where business owners can rent meeting space or attend networking events alongside the entrepreneurs who rent physical desks.

A business owner who rents a virtual office doesn’t have to visit the location. They don’t actually work in that office, and neither do their employees. In fact, the owner might be the only employee in that city or country, even though workers can use the virtual office address on their email signatures and other correspondence. 

What Are the Benefits of a Virtual Office?

There are several benefits for companies that set up a virtual office space. First, the address can establish the business as a professional company in a high-demand location. The business owner doesn’t have to give out their personal address—affording additional privacy from customers and vendors. 

One of the most important benefits of a virtual office: the ability for a business to save money. A virtual office setup can cost around $50 to start. This is much more affordable than renting a physical desk in a workspace (which can start around $250 per month) and substantially more affordable than paying for office space, utilities, furniture, security, and other costs on their own. 

A small business or startup can save money by operating remotely while appearing professional and established with a virtual office.

The virtual address also establishes a company’s time zone, which is important if the business is working with customers across the globe or has employees in different parts of the world. A business with a virtual office in Boston likely has operating hours in eastern standard time—so a potential employee who applies for a job from California will know that the interview will likely be scheduled around the eastern time zone. 

Finally, some businesses need professional addresses to fulfill their marketing and operations requirements. According to the CAN-SPAM Act from the Federal Trade Commission, which sets guidelines for email marketing, your message must include your valid physical postal address. A virtual office gives companies a valid address to use. 

What Are the Drawbacks of a Virtual Office?

While a virtual office might seem like an optimal solution for a new business, there are some limitations that could hold you back. First, you may not have access to the meeting space you want. Your virtual agreement might not allow you to rent meeting rooms or will charge you extra fees if you do. These restrictions could cause additional headaches or expenses when trying to coordinate in-person meetings or events.

Additionally, a virtual office might only be a temporary fix if you plan to scale your business into a physical setting in the future. This scenario is fine if you rent an office virtually long enough to grow your business, but you may need to change your address once you have a physical location—even if it means settling into a different coworking space. 

In some cities, the location of a business plays a major role in the candidates it attracts. You could lose talent if you hire based on your virtual address and then set up an in-person location (with employees who commute to the business each day) in a different part of town. However, if you plan to keep most of your employees remote, this shouldn’t be an issue. 

How Does a Virtual Office Affect Client Relations? 

For the most part, your clients shouldn’t be affected by your virtual office. If you need to meet with your clients in person, you can offer to visit their physical location or suggest a third-party location like a coffee shop. The COVID-19 pandemic has also further normalized virtual meet-ups, so you can encourage clients to meet virtually through a phone conference or video call. 

Many companies are transparent about the fact that their business is fully remote. As virtual offices become more common, companies can tell clients that their office address is mostly symbolic and their team works from across the country. Today’s entrepreneurs take pride in the digital nature of their organizations, which means they don’t see the need to hide their virtual office status. 

Decide Whether a Virtual Office Is Right for Your Business

If you are an entrepreneur who’s just starting out, consider whether a virtual office is the best option for your company both now and moving forward. You may be able to save a significant amount of money by operating remotely and growing your brand without setting up a physical office space. 

However, if you are just starting to work with your employees and contractors, you may want to build up your in-person dynamic first and then grow more remote. The choice is yours, based on your budget, your business model, and your future plans.

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Derek Miller

Derek Miller is the CMO of Smack Apparel, the content guru at Great.com, the co-founder of Lofty Llama, and a marketing consultant for small businesses. He specializes in entrepreneurship, small business, and digital marketing, and his work has been featured in sites like Entrepreneur, GoDaddy, Score.org, and StartupCamp.