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As businesses grow, so do their needs. A cell phone may have worked when a company was starting out, but once it’s off the ground, a phone system becomes necessary.

While there are three main types of phone systems with so many options, features, and new technology, choosing the right one can be overwhelming.

Here is a breakdown of the three different types of business phone systems.

Types of Businesses Phone Systems

Virtual Phone Systems

A virtual phone system is a call-forwarding solution that transfers incoming calls from the main business line to mobile devices. This arrangement allows businesses to present a professional image. It includes various features such as call screening, online faxing, automated receptionists, and more.


  • Easy to set up
  • Additional features like call screening, online faxing, automated receptionists
  • Professional image with investment in hardware


  • It relies on a user’s local network connection
  • Businesses are still charged for calls & team members have to use their phone plan’s minutes

Best For

  • Sole proprietors and big corporations

Traditional Landline System

Landline systems are traditional phone systems supported by a local or regional phone company. This option requires each worker to take calls from a physical on-site phone.

Landline systems require private branch exchange (PBX) hardware onsite. This hardware creates multiple extensions and has several features, such as call directories and call transferring.


  • Reliable


  • Most phone companies are phasing out
  • Installing and maintaining is challenging

Best For

  • Large corporations with in-house IT staff

Voice Over IP

VoIP is the newest system and currently the most dominant. It’s especially beneficial for small to midsize businesses, as it’s a sophisticated phone system that conveniently runs on the same internet connection a company already uses.

There are two types of VoIP phone systems.

On-Premise VoIP

With on-premises VoIP phone systems, the PBX hardware and all the equipment needed to run the phone system will be housed within the business.

On-premise systems require businesses to buy equipment upfront, but they give more control over service. IT staff can ensure the system is configured to meet the business’s needs.

Cloud-Based VoIP

Cloud-based systems come with the convenience of VoIP systems without the hardware and maintenance costs of on-premise systems.

With a cloud-based VoIP system, a business’s IT service provider is responsible for housing, maintaining, and upgrading the PBX technology. The cloud is convenient for growing businesses, allowing them to easily add new lines and access new features.

Cloud-based system service providers typically charge a monthly fee per user and feature.


  • Customizable service
  • Easy to Scale
  • No hardware or maintenance required options


  • For Cloud-based, no direct access
  • For On-Premise equipment will be needed

Best For

  • Small to mid-size businesses

Making a Decision

Choosing the right phone system for your business comes down to your business’s needs. It’s important to thoroughly evaluate your business’s unique needs and options to choose the best business phone system.

Have questions about what phone system is right for your business? Our IT experts are here to help. Contact Us.