To select the best business phone systems, we started with a list of more than 60 providers. We then narrowed our list to 20 cloud-based, on-premises and virtual systems that offer the most valuable features and tools businesses need.

To reach our final conclusions on which were best, we spent close to 100 hours researching these systems. This included studying each company's website, watching video tutorials and reading customer reviews. In addition, we contacted each company directly, posing as would-be business owners to learn more about their system, get estimates on pricing and gauge the type of support offered.

When selecting our recommendations, we put ourselves in the mindset of different types of businesses – small and large – and ones with varying needs, such as those with remote workforces or multiple locations. From there, we focused on the specific types of services, hosting options, features and support each of those businesses would find most valuable.

In the end, we chose the three best phone systems for each category. We single out one of those three as a recommendation for each category below. You can read more about all of our best picks by clicking on the links above. To learn more about making the best of use of your phone system, check out our articles on phone systems.

Best Phone System for Small Businesses

A phone system is a critical communication tool for any small business. Being able to effectively communicate with clients and customers can make the difference between success and failure. Today's phone systems give small businesses the same tools and features – such as call routing, ring groups, automated attendants and videoconferencing – that previously only large corporations could afford. Phone systems like those from 8x8, RingCentral and Nextiva tailor their services to small businesses. They have the features businesses need and also are easy to install and use.

8x8

What makes 8x8 one of the best phone systems for small businesses is that it is hosted in the cloud and easy to use, has an assortment of valuable features, is affordably priced, and provides excellent customer support.

Read more here

Best Phone System for Very Small Businesses

While they might not need the same robust systems larger businesses do, very small businesses with just a few employees still need a phone system that is reliable and simple to use. In addition, it needs to include a variety of valuable features, such as voicemail, caller ID, conference calling and virtual receptionists. Phone systems like Ooma Office, FreedomVoice and RingCentral fit that bill. Those systems can be installed in just minutes and provide the features a very small business needs most.

Ooma

What makes Ooma Office ideal for very small businesses is the two types of systems it offers. In addition to a traditional phone system that works with desktop phones, Ooma offers a virtual system that works in conjunction with mobile and home phones. This lets businesses with just a few employees choose the type of system that works best for them. Besides being one of the best phone systems for very small businesses, Ooma is an excellent choice for a virtual phone system.

Read more here

Best On-Premise Phone System

Where a phone system is housed and installed is critically important to some businesses. Depending on the security guidelines a business must follow, having a system stored inside the business is not only preferable to some, but required. Avaya, ShoreTel and Cisco are among those that offer on-premise systems, which are installed inside your business and maintained by your own IT staff.

Avaya

Editor’s Note: On Jan. 19, 2017, Avaya filed for Chapter 11 bankruptcy protection. At this time, we are continuing to recommend it as one of the best small business phone systems. However, we are monitoring the status of the company and if necessary will adjust our best picks as the situation evolves.

Read more here

Best Cloud-Hosted Phone System

An increasingly popular option for businesses is having the phone system hosted in the cloud. This removes the burden of installing and maintaining the equipment. With these systems, all businesses must do is plug in their phones to start making and receiving calls. Phone systems like those from 8x8, Mitel and RingCentral offer cloud-based systems that require no installation or maintenance, include all upgrades, and offer a host of valuable tools and features.

Mitel

Mitel's MiCloud Office is one the best cloud-hosted phone systems for small businesses. The system offers a host of calling features, a variety of collaboration tools and seamless integration with mobile devices. It requires no equipment to be installed or on-site maintenance.

Read more here

Best Phone System for Call Centers

Businesses that run call centers have a completely separate set of requirements from other businesses. Besides the typical phone system requirements, they need a variety of other tools to run the center. This includes call queues, call recording, call routing and the ability for managers to listen in on calls. Call center phone systems, like those from ShoreTel, Avaya and 8x8, offer all these features, as well as a host of others. With these systems, everyone in the business can use the regular phone system. Call center services can then be tacked on for employees who need them.

ShoreTel

ShoreTel is the best phone system for businesses needing call center services because it offers multiple hosting options and a large number of features and tools, and it can serve everyone in the office, not just those in the call center.

Read more here

Best Virtual Phone System

Some small businesses, or those with a remote workforce, want to present a professional image but don't need a traditional system with phones in every office. A virtual phone system allows that convenience by serving as an extensive call forwarding solution. With virtual systems, each employee gets their own number or extension and then has calls to those numbers routed to a mobile or home phone. Virtual systems like those from RingCentral, Grasshopper and Ooma Office allow employees to stay connected to their business line at all times, even if they don't work inside an office.

RingCentral

RingCentral Professional is one the best virtual phone systems. It's easy to use and affordable, with a ton of valuable features. The system is ideally suited for businesses with a remote workforce, or for very small businesses that want employees to use their mobile devices as their main phones but still be able to present a professional image at all times.

Read more here

Best Phone System for Enterprises

Businesses with a large number of employees often have more complex phone system needs. Some may need an on-premises system, while others prefer cloud-hosted options. Some also might want call center services, while others put a premium on collaboration tools. Phone systems like those from Cisco, Avaya and ShoreTel are suited for larger businesses because they offer a range of services and hosting options. This type of flexibility gives enterprises the ability to configure the system in a way that best suits a large workforce.

Cisco

Cisco's phone systems are among the best for enterprises because they are available as on-premises or cloud-hosted solutions and can support thousands of employees. All of Cisco's unified communication systems can be configured specifically with the calling, mobility and collaboration features each business wants.

In addition to being some of the best for enterprises, Cisco's Business Edition 6000 systems are among our top contenders for the best on-premises phone systems.

Read more here

Best Phone System for Business With Multiple Locations

A phone system that can sync offices or stores in different cities and states is what businesses with multiple locations are looking for. Instead of having different systems in every location, each with its own bill, businesses with multiple locations want a system that can combine the services into one package. Nextiva, Avaya and 8x8 are among the providers that have phone systems specifically designed for businesses that operate in more than one place.

Nextiva

Nextiva is one of the best phone systems for businesses with multiple locations. It's a cloud-based VoIP system that can be spread across several offices and stores, yet still be managed from one central platform. Overall, Nextiva's phone system is extremely reliable, has a wealth of valuable features and includes top-notch customer support.

Read more here

Do You Need a Business Phone System?

Despite the growing popularity of email and text messaging, many customers and clients still prefer being able to reach businesses with a telephone call. Some small businesses, especially those with just a few employees, may think they can get away with everyone using a mobile phone. But having a complete phone system, whether it’s a traditional system with desktop phones or a virtual system that works in conjunction with mobile devices, can give a better appearance. For example, an automated attendant, hold music or the ability to host conference calls signals to customers that you're running a professional operation.

While small businesses previously had very few options for phone systems, today's market offers a wealth of options.

In the past, traditional landline phone systems were the only option. Today, many small businesses have switched to Voice over Internet Protocol (VoIP) and virtual systems. This provides access to the same feature-rich, high-powered systems that only large corporations used in the past. Today's systems also offer dozens of calling features, a number of collaboration tools, and the ability to integrate with computers and mobile devices, all for a fraction of the price of what old phone systems used to cost.

Choosing a System

With dozens of options, picking the right system for your business can be difficult. Here are some factors you should consider before selecting one.

  1. Reliability: The most critical aspect of any phone system is that it works. You want to research what each phone system has in place to ensure its reliability and ask several questions of the company. For instance, what is the system's uptime? How many data centers does it have? How many call carriers does it work with? What other steps is the provider taking to ensure you can make and receive calls at all times?
  2. Cost: Compare the cost of each system you are considering. Be sure to get specific price quotes that include not only the cost of service and any installation fees, but also all taxes. You don't want to budget for one cost only to get your bill and discover taxes and other fees have driven the price up by 10% to 15%.
  3. Hosting options: Not all phone system providers offer both on-premises and cloud-based systems. Be sure the provider you are considering offers the option you want.
  4. Features: Some phone systems offer hundreds of features and others far fewer. Make a list of what you want and make sure the system you choose has them available.
  5. Ease of use: A lot more goes into a phone system than just picking up the phone when it rings. Since today's systems are set up via online portals, you want one that is easy to learn and navigate.
  6. Security: If you are going with a cloud-based system, be sure there is proper security in place to keep your calls and data safe. Is the data encrypted during transmission? Are the system company's data centers guarded 24 hours a day? What precautions are in place in case of a natural disaster? These are all questions you should be asking.
  7. Mobility: If you want your employees to be able to tap into their business line wherever they are, be sure the phone system you are considering offers a full suite of mobile tools, including a mobile app and softphone.
  8. Employee access: The system shouldn't only be accessible to those in charge. Employees should also be able to tap into the system's online portal. This allows them to check voicemail when out of the office and set up call-forwarding rules for when they are away from their desks. In addition, some systems allow for instant messaging and video chats within the portal.
  9. Support: The vendor you choose should provide the level of support that fits your needs. If you are a business without an IT staff, you might want a provider with 24/7 support so you can get questions answered at any time. In addition, the best providers offer numerous ways to contact them, including email and live chat.

Landline vs. VoIP

The phone industry has undergone a tremendous transformation in recent years.  For decades, traditional landline phone systems were being used by all businesses. Today, landline systems have fallen by the wayside in favor of VoIP-based solutions.

Landline

Until recently, all businesses were using traditional analog landline telephone systems. These systems were connected to the Public Switched Telephone Network and ran on the telephone company's copper wiring.

While these phone systems were extremely reliable, they required expensive equipment that was hard to install and maintain. Besides the copper wiring that had to be run through the business, landline systems also required a costly private branch exchange (PBX). The PBX is what was used to switch calls between the business and the telephone network. It's also what was needed to offer various calling features, such as voicemail, conference calling and automated attendants.

Today, traditional analog landline systems are becoming obsolete. Telephone companies aren't developing new analog systems and are no longer providing updates to the systems they used to offer. Finding IT professionals with the skills to keep these systems up and running is also increasingly difficult. Telephone companies have largely shifted their attention to VoIP technology.

VoIP

Nearly all new business phone systems use VoIP. Instead of running on copper wiring like landline systems did, VoIP systems run on an internet connection. It's the same connection most businesses already use to get online. Being able to tap into an existing data connection saves businesses the trouble and expense of installing and maintaining phone lines throughout their offices or stores.

In addition, VoIP systems work in conjunction with cheaper and less bulky PBX equipment. This allows small businesses to access a host of calling features they previously couldn't afford. These are some of the many features of VoIP systems:

  • Voicemail
  • Voicemail transcription
  • Call recording
  • Call queues
  • Call routing
  • Interactive voice response
  • Interoffice instant messaging
  • Conference calling
  • Automated attendants
  • Ring groups
  • Directory assistance
  • Internet faxing
  • Missed call notifications

VoIP systems also easily integrate with computers. This lets employees make calls from their desktop or laptop computers and have voicemail messages sent directly to their email inboxes, among other things. It can also be beneficial for businesses using customer relationship management (CRM) programs.

When VoIP was first introduced, there was much concern over the call quality. Many felt calls sounded staticky, and others had problems with calls dropping off. As the technology has improved, so has the quality of the calls. In fact, the connection quality difference between VoIP and landline is now so insignificant that most users have no idea when they are using VoIP and when they are on a landline connection.

To guarantee perfect call quality on VoIP, businesses must make sure they are configuring their data network properly. This requires them to have enough bandwidth to handle all the calls being made and configure their network so voice calls take priority over other online traffic.

The only businesses that can't take advantage of VoIP phone systems are those in communities without access to high-speed internet service or with unreliable internet service.

On-Premise vs. Cloud

Unlike landline phone systems, which require all equipment to be housed and maintained inside the business, VoIP systems offer the option of hosting everything on the premises or in the cloud.

On-Premise

Similar to landline systems, on-premises VoIP systems have all the PBX equipment installed and housed on location in each business. With this option, you are in total control of your system. You aren't relying on anyone else to make sure it is running, and you can configure it to your exact specifications.

However, since it is located in your business, your IT staff is responsible for all repairs or upgrades. On-premises systems also need to be professionally installed.

The cost structure for on-premises systems also differs from cloud-hosted solutions. These systems are purchased upfront and typically require one-time large capital expenditures for the PBX equipment, phones and installation. Besides the one-time charges, there are smaller recurring fees for the use of SIP trunking services or PRI circuits, which allow the systems to make and receive calls.

Another difference is security. On-premises systems don't have the same security concerns as cloud-hosted solutions, since all the data is stored within your business. Experts say businesses with serious concerns about keeping their calls and phone system data private are best served by on-premises systems. This option allows businesses to configure their firewalls exactly as desired to protect the phone system from any type of intrusion.

Other businesses well-suited for on-premises phone systems are large corporations that can afford the upfront costs and businesses that want a system they can specifically customize.

Cloud

Cloud-hosted phone systems are becoming popular among small businesses. With this type of phone system, all the equipment is housed and maintained in the cloud by your phone system provider. Since everything is stored in the cloud, your phone system provider handles all maintenance and upgrades. The only equipment the business needs is the phones themselves.

Most cloud systems are essentially plug-and-play. Once you activate your service and receive your phones, they can be plugged into any Ethernet port, and calls are ready to be made and received.

The downside to cloud-hosted solutions is that businesses are at the mercy of the phone system provider to keep their service up and running. To ensure this happens, most of the top vendors have several redundancies built into their systems. This includes having multiple data centers so that if one goes down, the data can be transferred seamlessly to another to ensure the continuation of service.

Overall, the top phone system providers boast documented yearly uptimes of at least 99.99%. This means their service is only down a few minutes each year. To protect against hacking, most phone system providers encrypt data when it is transferred to and from the cloud, and have round-the-clock security at their data centers. 

Cloud-based systems are totally controlled via online portals. From the portal, business leaders can add and remove users, assign phone numbers and extensions, and provide employees with access to the system. Employees can use the portal to check voicemail, set call-forwarding options, and make and receive calls from a softphone on their computer. Unlike on-premises systems that require large upfront costs, cloud-based systems have monthly fees. Most services charge per-user fees that include unlimited local and long-distance calls. SIP trunking services are also included in the cost. The only upfront cost with cloud systems is the phones.

Phone system experts believe cloud-hosted systems are ideal for small businesses because they have few upfront costs and consistent monthly charges that can fit easily into a budget, and don't require trained IT experts to keep them up and running.

Phones

Besides the PBX equipment that runs the system, the main component of a traditional phone system is the desktop phone. Most of the phones today are IP phones, which are compatible with all VoIP systems, regardless of whether they are hosted on the premises or in the cloud.

There is much variety in what type of IP phone you can connect to your system, including corded and cordless phones, conference phones, video phones, and speaker phones. Among the features that many newer phones offer are LCD touchscreens, presence status, power over Ethernet, integration with online calendars and programmable buttons.

While a few phone system providers have their own name-brand phones, most resell other brands. Among the more popular brands of IP phones are Polycom, Yealink, Panasonic, Sangoma, Grandstream, Snom, Digium and Aastra. For those who still prefer analog phones, many providers have adapters that can work with VoIP systems.

Virtual Phone Systems

Another option for small businesses is a virtual system. These systems, which work with mobile or home phones, are essentially extensive call-forwarding services.

Virtual systems let employees have their own business number or extension. When a client calls that number, the call is immediately transferred to a phone of the employee's choosing.

Employees can program their business lines to ring multiple phones, either at one time or in succession. For example, an employee can set it to first ring a mobile device and then, if unanswered, ring their home phone.

While they don't offer as many features as traditional phone systems, virtual systems have many valuable options. These include automated attendants, call screening, voicemail, voicemail-to-email and online faxing. This type of service gives businesses with a remote workforce a centralized phone system that presents a professional image.

Similar to cloud-hosted systems, virtual systems charge a monthly per-user fee. However, they do not include unlimited local and long-distance calling. Most virtual plans only include a set amount of minutes.

Mobility

While virtual systems allow businesses to solely use mobile devices, VoIP systems allow businesses to combine traditional phone systems with mobile options. Giving employees the freedom to always be connected with their business phone lines is increasingly important, as many employees no longer spend all their time in the office. Most VoIP systems let employees access their phone systems via a mobile app on their smartphones.

The biggest benefit of the mobile app is that it gives employees the ability to make and receive calls from their business lines. When they call a client, their business phone number shows up on the caller ID rather than a personal number. In addition, calls can be forwarded to mobile devices to ensure they never miss an important call.

Many phone system mobile apps also include a seamless transfer feature. This lets workers easily transfer a call from their desk phone to their mobile device mid-call so they can continue talking if they need to leave their office. Other features many mobile apps include are the ability to check voicemail messages, conduct video chats, chat over instant message with co-workers, set call-forwarding options, and send and receive online faxes.

These mobile tools are often critical because of the value they add in ensuring customers and clients can find employees whenever needed. At the same time, they help employees because they are no longer tethered to their desks.

Costs

Costs for phone systems vary greatly depending on the system you choose, hosting option, number of features and number of employees you have. Generally, regardless of where it is hosted, phone system providers charge on a per-employee basis. There is a smaller, ongoing monthly charge for cloud systems and a larger, one-time fee for on-premises options.

Cloud-based systems cost anywhere from $15 to $50 per user monthly. These prices vary depending on the features and number of users. The price per user typically drops with more employees.

On-premises systems can cost between $500 and $1,250 per user. There also is usually an installation fee with on-premises systems that can be several thousand dollars.

For on-premises systems, there is the added cost of SIP trunking or PRI circuits. SIP trunks are becoming more popular because they are significantly cheaper than PRI circuits. Cloud-based systems include this cost in the monthly fees.

The only other cost businesses can expect to pay is for the phones. While some providers throw in basic phones with the service, most charge for them. Desktop phones can cost $50 to $500 each, with conference phones ranging from $500 to $1,000.

Since pricing can vary greatly, we encourage you to contact each company you are considering to receive price quotes specifically for your business.