What is a virtual office? A complete guide for small business owners

For many small business owners, leasing an office isn’t feasible. It’s not just the rent – it’s the utilities, stocking and maintenance that add up to a sizeable chunk of your profits.

However, a non-residential business address can be beneficial. Virtual offices have appeared on the scene to claim the middle ground between a physical office and working from home.

In this article, we explore the purpose of virtual offices, how they can help your business – and why they’re often a necessity.

Table of contents

• What is a virtual office and how does it work?
• Who can use a virtual office?
• 7 benefits of using a virtual office
• How a virtual office supports remote working
• How much does a virtual office cost?
• Where should my virtual office be based?
• Is it legal to use a virtual office?
• What are the features of a virtual office?
• What are the disadvantages of a virtual office?
• Is a virtual office address right for you?

What is a virtual office and how does it work?

A virtual office is a service that you can pay for, typically on a monthly basis, to get a real address that you can use as your own. 

The virtual office address is actually a real office space. You just don’t happen to work there. Although, some providers do offer services, such as renting desks and meeting rooms per hour, days or longer term. 

A virtual office is a real office address that you can display on your website, use to receive post, and use for official purposes, including your company registration.

For example, when you start a company with Tide, you can select a virtual office address during the registration process and set it all up in one go. Get started with Tide’s company registration service.

How does a virtual office operate?

Like any business service, the exact features of the service depend on the provider, but most virtual office addresses share a few aspects. 

You’ll probably pay a monthly fee to use the virtual office address as your official correspondence address. Some providers offer flexibility with month-on-month contracts and may apply discounts on 12-month or longer-term contracts. 

You may also be able to receive post at the address, though some services separate letters and parcels into different tiers. You can either collect it in person or have it forwarded to your home. 

Some providers may include mail scanning and emailing your letters as part of their standard mail handling service free of charge or may offer mail forwarding at an additional cost to you. Always check beforehand if this is a service that is important to your business.  

Top Tip: Just getting set up with your business and wondering how to get started? Make sure you’re setting off on the right foot. Read our guide on how to start a business in the UK 🚀

What are the features of a virtual office?

Virtual office addresses give you a professional business address where you can receive post. Most virtual offices allow you to collect your post in person, or they will forward it periodically for a fee. 

Some virtual office packages come with add-ons, such as: 

• Telephone answering services
• Virtual receptionists
• Virtual assistants
• Meeting spaces and conference rooms

Who can use a virtual office? 

Anyone can use a virtual office. 

It doesn’t matter if you are a sole trader or a limited company. These services are open to anyone who needs a fixed address away from home.

For example, virtual offices are great for home-based business owners that don’t want to make their personal address public. Or, growing businesses seeking office space (if providers offer meeting or conference room use) without high purchase or rental fees. 

As it’s a requirement to have a legal address for your business, virtual offices also help foreign entrepreneurs obtain a legal address with minimal hassle.  

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 to use a virtual office for your business.

1. A virtual office gives you a permanent address

Do you know where you’ll be living or working next year? 

If you move around regularly, you’ll know that one of the greatest hassles of moving is updating your banks, insurance companies, lenders, energy providers, phone companies and membership organisations with your latest address. 

This effect is only magnified if you run a growing business with multiple partners, clients, customers, accountants and service providers – not to mention the tax correspondence.

If you fail to receive letters from Companies House, for example, your company could get dissolved without you ever knowing there was a problem. 

Virtual office addresses remain the same wherever you may travel. You can work from a beach in Bermuda one month and a co-working space in Portugal the next, and your post will continue to stack up at the same desk in the same city (unless you have it forwarded from your mailing address to your current location).

2. Shield your home address

All limited companies are publicly listed, including their address.  

When you create a company, your details are shared online by Companies House (as well as other websites and directories). 

This transparency is fine for some companies, but it can be difficult if you run your business from home. By using a virtual office address, you can protect your privacy and keep your home address off the internet and other public records. This also applies to the company director’s service address. If you want to keep that off the public records, you can use a virtual office address for this one as well.

3. Adhere to your tenancy agreement

Some landlords do not allow tenants to use their properties for commercial purposes. Some tenancy agreements explicitly state that companies may not be registered at the address. 

If you live in rented accommodation, you should check the terms of your tenancy agreement. Getting a virtual office address may be a necessity.  

4. Credibility and branding

Building a successful business relies, in part, on projecting a strong brand that appeals to your target market. 

Your base of operations is part of this image that you project. Some companies need an office address inside a major city centre, rather than a suburban residence, to project distinct professionalism and win the right kind of customers. 

It’s a strategic way to build trust, which is a priceless commodity for any new company. 

5. Affordability

Virtual office addresses cost a fraction of the rent that you would pay for an office in a similar location. Because of this, some companies will rent office space in a less-impressive location and have a public-facing virtual address somewhere with more notoriety. 

6. Start a UK company from abroad

All UK companies must be registered to a UK address. If you are based outside the UK, you will need to arrange a UK address in order to operate as a UK company. 

Your virtual office provider will be able to manage your mail and forward everything to your primary home or work address. 

If you create your limited company with Tide, you can select a virtual office during the sign-up process.

7. Low level of commitment

Committing to one property for a long period is daunting, especially if you’re a new business owner and don’t know how successful your venture will be.

You could begin in a small physical space and scale up as the startup grows, but regular address changes create a lot of admin and can confuse customers.

Using a virtual office address, you can build foundations without being tied to a single location or property size. It gives you time to find your company’s direction and gauge success before you settle on a more long-term physical base.

How a virtual office supports remote working

Remote working is at an all-time high in the UK. In an ONS survey of UK workers conducted in spring 2022, 38% said they had worked from home at some point in the previous seven days – up from 12% from a similar, pre-pandemic survey.

With employees expecting more flexibility, small businesses are under pressure to adapt. But the shift in working patterns presents an opportunity for some companies, too.

By using a virtual office address for registration and correspondence, businesses in some industries can adopt a ‘remote-first’ approach. Instead of committing to a single physical premises, you can pay for co-working spaces, serviced offices and home office equipment as and when necessary, allowing your team to work how and where they like.

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

• Build diverse teams and access the best talent. Widen your search to include candidates anywhere in the world.
• Scale easily. Respond quickly to demand by hiring new staff and freelancers without needing to expand your premises.

Create a strong work-life balance. Eliminate commuting and give staff the freedom to work at times that suit their lifestyles.

How much does a virtual office cost?

The cost of a virtual office depends partly on the location, the provider and the additional services you want. For a basic virtual office address, you might pay £20 – £70 per month. 

If you want additional features such as mail forwarding, phone answering or access to a meeting space, you will probably need to pay a little more. 

Where should my virtual office be based? 

The ideal virtual office location is down to your business needs, namely the type of company you’re building and the clients you want to attract. 

While many people will choose an address in the largest city near them, others will want an office address in their nearest town. For some business owners, the specific location is crucial. In addition to choosing the right city for your business, you may know the particular neighbourhood, street or building where you want to be based.

Top Tip: Register your company – and get your mail wherever you are 🎉
It’s FREE to set up your limited company and open a business current account with Tide. You can also opt for a virtual office address, to keep your home address private and get your mail wherever you are. 

Is it legal to use a virtual office?

Yes, virtual office addresses are completely legal. Under UK law, there is no obligation to work from your registered address. 

In fact, before virtual offices became commonplace, many companies would use their accountant’s office as their registered address. Though virtual offices may be relatively new, using an alternative business address has been popular for decades. 

What are the disadvantages of a virtual office?

This is tricky to answer because there aren’t any obvious flaws in the virtual office service concept. 

Providing you choose your virtual office carefully, and select an appropriate location, you should get all the expected benefits. 

You may reach a point where, instead of having a virtual office in central London (for example), you need to have a physical office space in central London. If so, it’s easy enough to cancel a virtual office address service and update your registered company address. 

However, you might prefer to maintain the virtual office address for your official correspondence like bank statements and tax paperwork. This future-proofs admin headaches, particularly if you are likely to change your physical address any time soon (eg you outgrow the space). 

Top Tip: Growth is an exciting time for a business, but sometimes you need a little extra funding to get to the next stage smoothly. If you’re considering getting a business loan but are worried about your credit rating, read our guide on how to get a business loan with bad credit 💷

Is a virtual office address right for you?

Unless you’re a sole trader with a tenancy agreement that forbids you from using your home address for business purposes, or you’re starting a UK business from overseas, a virtual office isn’t essential to running your business.

That said, virtual offices provide a suite of benefits to business owners of all types:

• Business owners – especially those considering setting up a limited company – don’t have to reveal their home address which provides peace of mind
• With a fixed point of contact, you don’t need to worry about the admin work that comes with moving. 
• You’re free to switch physical locations as and when you need or want to, so you can focus on building a great team and growing your business.

What’s more, most virtual office address agreements are rolling one-month contracts, so you can usually cancel at any time if you get a new office or want to wind up the business. This makes it easy to try the virtual office approach and see if it works for you.

With virtual offices, the commitment is small but the impact is big.

Photo by Anna Shvets, published on Pexels