The small business owner's guide to virtual offices

The cost of renting an office for many small businesses is prohibitive. Utility bills, stocking, and maintenance add up to a significant part of your profits, not just rent.

In some cases, however, it may be advantageous to have a business address that is not residential. The virtual office has emerged as a middle ground between a physical office and working from home.

This article explores the purpose of virtual offices, their benefits, and why they're often essential for businesses.

What is a virtual office and how does it work?

Virtual offices are services you can pay for, typically on a monthly basis, to get a real address that you can use as your own. 

There is actually a real office space behind the virtual office address. It's just that you don't work there. There are some providers who offer services like renting desks or meeting rooms per hour, day, or for a longer period of time. 

You can display a virtual office address on your website, use it to receive correspondence, and use it for official purposes, such as registering your company.

Tide, for example, allows you to choose a virtual office address during the registration process.

What is the process of setting up a virtual office?

Virtual office addresses differ from provider to provider, but they share a few features. 

Virtual offices are usually charged a monthly fee for using them as official correspondence addresses. Depending on the provider, a month-to-month contract may be available and discounts may be applied to longer-term contracts. 

Post may also be delivered to the address, but some services separate letters and parcels. It can be picked up in person or forwarded to your home. 

As part of their standard mail handling service, some providers may scan and email your letters for free, or may offer mail forwarding at an additional charge. Check beforehand if this is an important service for your business.  

What are the features of a virtual office?

You can receive post at a virtual office address if you have a professional business address. For a fee, most virtual offices will forward your post periodically or you can pick it up in person. 

Add-ons to virtual office packages include: 

• Telephone answering services

• Virtual receptionists

• Virtual assistants

• Meeting spaces and conference rooms

Who can use a virtual office? 

Virtual offices can be used by anyone. It doesn't matter whether you are a sole trader or a company. Anyone who needs a fixed address away from home can use these services.

Home-based business owners who don't want to disclose their personal addresses might benefit from virtual offices. Business owners seeking affordable office space (if providers offer meeting or conference rooms). 

With virtual offices, foreign entrepreneurs can also get a legal address without any hassle, which is a requirement for starting a business.  

7 benefits of using a virtual office

In the right circumstances, a virtual office address can give you levels of flexibility, credibility and stability that an actual office can’t match.

Here are seven reasons why you should use a virtual office.

1. You can have a permanent address with a virtual office

When you look ahead to next year, where do you plan to live and work? 

You know how difficult it can be to update your banks, insurance companies, lenders, energy providers, phone companies, and membership organizations after moving. 

A growing business with multiple partners, clients, customers, accountants, and service providers - not to mention tax correspondence - magnifies this impact.

Your company could be dissolved if you fail to receive letters from Companies House, for example. 

No matter where you travel, your virtual office address remains the same. Your post will continue to pile up at the same desk in the same city (unless you've forwarded it from your mailing address to your current address) whether you're working on a beach in Bermuda one month or a co-working space in Portugal the next.

2. Protect your home address

The address of all limited companies is publicly available.  

Company information is shared online by Companies House (as well as other websites and directories). 

When you run your business from home, this transparency can be difficult. You can protect your privacy and keep your home address off the internet and other public records by using a virtual office address. The company director's service address is also subject to this rule. You can also use a virtual office address for this one if you want to keep it off public records.

3. Make sure you adhere to your tenancy agreement

Commercial use of landlord's properties is not permitted by some landlords. There are some tenancy agreements that explicitly prohibit companies from registering at the address. 

Check your tenancy agreement if you live in rented accommodation. It may be necessary to get a virtual office address.  

4. The importance of credibility and branding

In order to build a successful business, you must develop a strong brand that appeals to your target audience. 

This image you project includes your base of operations. For a company to project distinct professionalism and win the right kind of customers, it is essential to have an office address inside a major city center, rather than a suburban home. 

A new business needs trust to succeed, which is a priceless commodity. 

5. Cost-effectiveness

The cost of renting an office in a similar location is a fraction of what you would pay for a virtual office address. Some companies rent office space in a less-impressive location and have a public-facing virtual address somewhere more recognisable. 

6. Creating a UK company from abroad

A UK address is required for all UK companies. You will need a UK address to operate as a UK company if you are based outside the UK. 

Your virtual office provider can manage your mail and forward it to your primary home or work address. 

7. Low level of commitment

A long-term commitment to one property can be daunting, especially if you're a new business owner and don't know how successful your venture will be.

Having a small physical space is an option, but changing addresses regularly creates a lot of admin work and can confuse customers.

You can build foundations without being tied to a single location or property size by using a virtual office address. Before deciding on a more permanent physical location, you can determine the direction of your company and gauge its success.

Remote working with a virtual office

There has never been a higher level of remote working in the UK. Among UK workers surveyed by ONS in spring 2022, 38% said they had worked from home in the last seven days compared to 12% before the pandemic.

Small businesses are under pressure to adapt to employees' demands for more flexibility. Nevertheless, some companies can benefit from the shift in working patterns as well.

In some industries, businesses can use a virtual office address for registration and correspondence. Your team can work wherever and whenever they like, rather than committing to a single physical location.

Supported by a virtual office address, fully remote companies can:

• Access the best talent and build diverse teams. Include candidates from around the globe in your search.

• Easy to scale. Adding more staff and freelancers without expanding your facility will allow you to respond quickly to demand.

• Maintain a healthy work-life balance. Staff can work at their convenience and commute time is reduced.

What is the cost of a virtual office?

Location, provider, and additional services all play a role. A basic virtual office address might cost you £20 - £70 per month. 

Mail forwarding, phone answering, or a meeting room may cost more. 

Where should my virtual office be based? 

A virtual office location depends on the type of business you're building and the type of clients you want to attract. 

Most people choose an address in their nearest city, but others choose one in their nearest town. Certain business owners place a great deal of importance on the location of their business. Your business may also be based in a particular neighbourhood, street, or building where you know the best location.

Is it legal to use a virtual office?

It is perfectly legal to have a virtual office address. You are not required to work from your registered address under UK law. 

Many companies used their accountant's office as their registered address before virtual offices became common. Even though virtual offices are relatively new, alternative business addresses have been in use for decades. 

Do virtual offices have any disadvantages?

The concept of a virtual office service doesn't seem to have any obvious flaws. 

If you choose your virtual office carefully and select the right location, you should get all the benefits you expect. 

It may come a time when, instead of having a virtual office in central London (for example), you need physical office space in central London. It's easy to cancel a virtual office address service and update your registered address if this is the case. 

However, you might prefer to use the virtual office address for official correspondence like bank statements and tax returns. Especially if your physical address will change soon (e.g. you outgrow your current space), this eliminates admin headaches. 

How do you know if a virtual office address is right for you?

Unless you're starting a UK business from overseas or you have a tenancy agreement that forbids you from using your home address for business purposes, a virtual office isn't necessary.

Business owners of all types can benefit from virtual offices in the following ways:

• Those looking to set up a limited company don't have to reveal their home address, which provides peace of mind

• It's easy to move when you have a fixed point of contact. 

• As you grow your business and build a stellar team, you can move your physical location whenever you like.

Furthermore, many virtual office address agreements are rolling one-month contracts, so if you need a new office or want to wind up the business, you can cancel at any time. Virtual offices make it easy to try them out and see if they work for you.

The commitment is small, but the impact is substantial when it comes to virtual offices.

One of the companies which we recommend for your virtual office is The London Office which specialises in affordable Virtual Business Address & Telephone Answering services in the capital.