What is a phone system for a small business, exactly?

Let us break down the essentials of a small business phone system so that your business can find the perfect solution for your team.
Olivia Maier

Olivia Maier

26 min read

What we have for you today:

Our goal today is to leave you feeling not only comfortable as you search for a business phone solution, but confident that you will know exactly what to look for as you go through the many different providers. The last thing that a small business wants to do is to waste time on an extensive search, or implement a tool that ends up being unsuccessful. That’s why we’ve created this guide to help you on your phone solution search.

We are going to be going through all of the things that you need to know as a small business owner or decision maker looking to adopt a phone system. Your phone system, if configured correctly and provided by a top tier service, can become a massive asset to your business.

When we say top tier, don’t panic. We aren’t going to be recommending solutions that aren’t implementable, accessible, and affordable to small businesses. What we will be recommending is a business phone solution that will cover all of your bases.

We’re going to start by diving into the different types of business phone systems. This includes a familiar style, the landline, and a potentially new to you technology, the business VoIP phone. After that, we will be discussing the essential features that your business phone system must have in order to provide robust communication capabilities. From there, we will be evaluating some of the top business phone providers, and comparing how well suited they may be for a small business. Finally, we will dive into some FAQs, so that we can address some of the most common questions and concerns about adopting a small business phone solution.

If that sounds good to you, then we can’t wait to get started!

Types of Business Phone Systems

Business phone systems can be broken down into two main categories of solutions, landlines and VoIP phone systems. While there are some other nuanced categories, or “solutions” such as simply using your personal phone number for business purposes, these two broad categories will likely define your phone solution search.


Landline phones are often what people first think of when they consider a business phone solution. Afterall, landlines have been around for decades, and most people have grown up seeing landline phones in their houses, businesses they have frequented, and more.

A traditional landline phone requires the use of analog lines to carry voice signals. Those analog lines are typically in the form of copper wires that are hardwired into your business phone. This is different from the wireless communication you have experienced when you use a mobile phone.

Your voice travels in small sound waves that are carried into a thin metal disk that is inside your landline phone which converts your voice into electrical energy. The energy is carried over the wires, before being converted back into sound waves for your receiver to hear.

Landline phones can come as both corded, and cordless options. The corded option will be connected to cabling through a wall jack. The phone base itself, and the receiver or headset will be connected by a cord. A cordless landline has a phone base that is connected to the cabling, but the receiver and headset are connected wirelessly. While the cordless landline solution allows for some mobility, the range is usually limited to being within the premises of your phone solution.


Voice over Internet Protocol (VoIP) is a phone technology that lets users make calls over an internet connection. The voice signals are delivered over internet protocol networks, such as the internet. This is an alternative to the public switched telephone network (PSTN) or simply referred to as plain old telephone service (POTS).

You may have heard it called IP telephony, internet telephony, or other alternative names. At the end of the day, terms used to describe internet based phone calls are referring to VoIP systems.

VoIP systems are able to pick up your voice through the microphone of the device that you are using. Your voice generates analog voice signals, which are compressed into packets of data. The VoIP data packets are then transmitted over the internet and then decompressed back to analog voice signals for the person on the other side of your phone call.

For a VoIP user making and receiving calls is done in the same way that it would be with a traditional landline telephone system. The person on the other end of the call, whether they are using a VoIP system or not, wouldn’t notice any difference as well. This is helpful as it allows businesses to take advantage of this technology without any additional process necessary for users or the receivers of their calls.

There are two types of VoIP solutions, on-premise and hosted. An on-premise solution requires your business to install and maintain the large servers that make this technology available. Hosted VoIP solutions are much more popular for teams that aren’t large enterprises, as a provider will maintain, store, and update the servers.

Landlines vs. Hosted VoIP Solutions for small businesses

While landlines have been around for decades, we think that hosted VoIP solutions are the present and future of phone communication for businesses of all sizes. However, small businesses can especially benefit from adopting a VoIP system.

The advantages of a VoIP phone when compared to a traditional landline phone is the flexibility and scalability of these systems. You won’t be physically tied down to one location with those copper wire phone lines. Instead, you will be able to access your business phone communications wherever you are, from a wide variety of devices. This is because VoIP solutions are able to be accessed through your mobile device, tablet, laptop, desktop, and even your existing hardware phone. This allows small businesses to use the technology that they already have on hand, instead of having to invest in specialized tools or hardware.

You also will be able to take advantage of always up to date technology, instead of those wires that may not have been updated in decades. This is one factor that can help your team and your callers see improved call quality and overall communication.

VoIP phone providers are also able to update their offerings, and typically are continuously doing so. Whether this means offering new integrations as business tools gain in popularity amongst their users, improving existing features, or updating their feature lists, there is always something new right around the corner for your team to take advantage of. The ability to access improved technology and innovations will be a benefit to your team.

A large bonus is also the pricing structure and overall cost of a VoIP solution. VoIP providers will typically bill your team per user/per month. That means that your team won’t be facing a large overhead, or locked into a pricing structure that only makes sense if your team expands. Instead you will be billed for what you are actually using, and are able to adjust as needed. VoIP solutions are also oftentimes cheaper than landline phones, helping your team save money without sacrificing quality of phone communication.

Business Phone System Features

When evaluating different hosted VoIP providers, it will be handy to have a list of must-have features already by your side. This will help you determine if the solution you are looking at will actually work for you and your team.

Explore more features

While your exact list of features will differ based on your specific use case, we wanted to give you a few features that we think are essential to have.

Effective Call Routing- Voice IVR

One of the most important tools for a team of any size will be effective call routing. Even if you are running a solo team, call routing can help you determine caller intent, call prioritization, and just better manage incoming calls. If you have a couple team members, you are also in a position to benefit from call routing.

However, not all call routing is the same. Traditional menus have become a huge source of frustration and exasperation for callers. Think of the last time that you connected to a business you were trying to call, only to hear a long list of menu options saying “press 1 for sales, press 2 for billing…” and so on. These menus might seem beneficial to your business, but in reality they simply frustrate callers and make phone communication less accessible. If your caller is busy doing another task, for example driving, they may not be in a position to press different menu options or to remember the exact number that they need.

That is where conversational, voice based IVR comes into play. Your team can still see the benefits of effective call routing, but in a better, more modern way.

All your team has to do is to assign certain keywords such as “billing” to members of your team when configuring your phone system. Then, as your caller is connected to your phone, they simply have to speak naturally and conversationally. Your phone system will take care of the rest.

The ability to keep your existing business phone number

If your business already has an existing phone number, then it can be essential to ensure that you are able to port it or transfer it into your new phone solution.

Your business phone number is likely to be branded across most, if not all, of your marketing materials. This makes changing your existing phone number a complicated and expensive process, as you must spend time and money updating everything to make sure that it matches a new number. Unfortunately if you forget to update a particular marketing channel it could cost you thousands of dollars in lost business, all over a simple phone number mixup.

That is why any provider that you are looking at should be able to offer the ability for you to keep your existing business phone number. This will make it simpler for your customers, your team, and much healthier for your wallet.

Compatibility with your existing devices

One of the ways that Hosted VoIP solutions can become highly cost effective for your team is by being compatible with a wide variety of devices. A hosted VoIP solution should be able to connect to your desktop computer, laptop, smart phone, and tablet. The best VoIP solutions will also be compatible with your existing hardware desktop phones.

When you aren’t forced to buy or lease phone equipment, you are already able to save money. But this is also a huge benefit in terms of productivity and ease of use. By using the tools that your team is already working on, you can improve the overall efficiency of your business phone communication. Plus, this will help your team avoid an overly complicated onboarding process as they will already be familiar with their devices.

This will also help you if you are interested in offering or continuing to offer flexible working. The devices that enable your team to work remotely will be the same devices that they can access your phone system through, such as their laptop.

Avoid having to buy costly hardware just to enable your phone solution, and instead take advantage of the tools you have already invested in.

Call forwarding to your mobile phone

In the same vein as compatibility with your existing devices, having forward to phone increases flexibility and mobility. Forward to phone is a somewhat simple capability that should be considered essential for your business phone system.

With forward to phone, you are able to transfer an active call from whatever device it is answered on to your mobile phone. That means that you don’t have to choose between hanging up an active call and being tied to your desk. Whether you need to step away to handle other tasks, are experiencing computer troubles, or have some other use case, being able to forward a call to your phone can be a huge help.

One of the best ways to take advantage of your VoIP system and your mobile phone is through providers that have a mobile app available. This will help you distinguish between incoming calls, easily sorting out personal and business. Having a separate app to ring just improves the use of your phone for business purposes.

Visual voicemail

With visual voicemail capabilities, your missed calls just became even more convenient. Visual voicemail is also described as automatic voicemail transcriptions. A voicemail transcription is exactly what it sounds like, a way for you to read the important information that is typically contained in audio files and stored in your voicemail box.

Audio isn’t always convenient, especially if you are working remotely and are worried about maintaining confidentiality with important customer information. It also may not be convenient if you are working in a busy or noisy area, or simply don’t want to pull out your headphones to listen.

No matter what the specific use case is, a visual voicemail feature can help you access important information. Look for a system that provides both traditional audio voicemail and visual voicemail for ultimate convenience.

Call recording

Call recordings can be a great way to better engage in customer service. When you take advantage of call recordings, you avoid having to take notes while on an active call. That way you can focus on the conversation at hand, and better serve your customers without having to sacrifice keeping track of important information.

The best call recording systems will be able to start, pause, and stop call recordings all while on an active call. That way if there is sensitive information that doesn’t make sense to keep on record, you can avoid potential problems. This can also help you avoid having lengthy call recordings when you only want access to a small snippet of the conversation.


Business text messaging is a great way to open up another channel of communication with your customers. Having the ability to text your customers directly from your business phone number will help maintain a professional appearance, while accessing the convenience of instant messaging.

Look for a business phone system that can give your team the ability to connect with your callers in a way that may be most convenient for them. Access to business text messaging is essential in 2022 for a complete and robust business phone system.

See pricing plans

The best small business hosted VoIP phone systems on the market

We wanted to give you a rundown of some of the top providers, to help you narrow down your business phone system search.

Yodel is a robust business phone system that comes complete with advanced features that can’t be found in any regular old business phone. The best part? You don’t need to be a technology expert to take advantage of them. Yodel is perfect for teams large and small as they provide a wide range of resources to get started, helping your team avoid harmful downtime and overly complicated onboarding processes. Yodel’s system is accessible from mobile devices, tablets, desktop computers, laptops, and even hardware SIP phones. This means that you can take advantage of whatever tools you already have on hand, or help further support your desire to invest in important business technology.

You will never have to worry about inadequate support, as the resources that are there to help you get started are available throughout your time with Yodel. Yodel is able to offer tools for your team such as ebooks, help articles, live chats, and personal calls with their team.

As far as pricing goes, Yodel offers two different plans, Premium and Premium Plus for your business to choose from. The Premium option will cost your team $25/user/month, while the Premium Plus plan will cost $35/user/month. One of the key differences is the ability to take advantage of advanced integrations and concierge phone support options. Other advanced features such as business text messaging and voice based IVR will be made available to your team regardless of the plan you choose.

Another great benefit of Yodel is their ability to provide a wide range of virtual phone numbers, and can even get you set up with international virtual options. Yodel is a complete business phone system, with voice based intelligent IVR, business SMS texting, and a plethora of integrations. These integrations range from helping your team keep track of everything within Slack, connect to your favorite CRM tool, and more. Whatever business tool your team is using, it is very likely that there is a way to connect it with Yodel.


Nextiva’s phone system is a part of their larger platform that includes customer management and other communication channels. If you already have a customer management platform that you have invested in or have spent time implementing, it may be worth investigating the time it will take to transfer all of your important client information.

With Nextiva, you’re able to take advantage of unique offerings such as the ability to buy or lease phones and other hardware. While VoIP is known for being flexible enough for you to access your phone communication from any device, this could be a good way to use hardware phones if that is your business preferences.

Nextiva has a wide range of pricing available, which is billed per user per month. However, the price per user will adjust if you have more members on your team. As a small business, you are likely to pay around $25 per month to take advantage of Nextiva. For their professional plan, you will probably be looking at around $28/user/month. There is also an enterprise plan that is around $38/user/month that is available to be selected.

It is important to note that the differences in pricing will have an impact on what is available to your team. Some essential features such as conference calls require that your team is at least paying for the professional plan. Take the time to explore what is actually available in the plan that makes the most financial sense for your team, and be aware that there may be limitations on essential capabilities.

Nextiva is a communication system that offers features such as unlimited calling, internet faxing, voicemail transcription, and more. It appears that some of the collaboration features might be a little less extensive than other options, but it is worth exploring Nextiva’s features to figure out if they are able to meet your needs.


Vonage’s cloud based VoIP services enable international calling, and is supported in over 40 countries. You can take advantage of over 20 different integrations, including Microsoft Office 365 and G Suite. If you are interested in video calling as well as message and voice, then Vonage may be an excellent choice.

It appears to be a simple to use platform, with the ability to add on services. Vonage offers a small business phone system option, which can provide a few basic phone necessities. If you want you can increase your plan so that you can take advantage of features such as toll-free numbers, voicemail transcriptions, advanced integrations, and more. If you are specifically looking for capabilities such as toll-free numbers, make sure that you are comfortable with one of the larger phone plans.

The pricing of Vonage is a little different than other VoIP providers, as it is based on a set price per line per month, instead of being per user. The most basic level starts at $15 per line/month, while the advanced level goes up to $40 per line/month. As stated before, the small business plan is affordable but limited. Some of the limitations, such as virtual receptionist capabilities and CRM integrations may require you to upgrade to one of the more advanced levels.

Vonage has a free trial available where you can test out their system for 14 days for free. You can continue upgrading and adding on new tools, but be cautious because the more features you add, the more expensive Vonage becomes.

It appears that the only contracts available lock you in for a year, so it is important to test out Vonage and make sure this is the right solution for your team.


RingCentral is a great solution that is able to check many of the business VoIP boxes, including the basics and next generation features. However, their pricing may cause issues for certain teams. RingCentral pricing depends on the range of employees using your system (1, 2-20, 21-50, 51-99, 100-999+), and then what features you want to have included.

That means that the Essentials plan will cost a different amount for businesses of different sizes. This can make the system a little trickier if your business is planning on growing, downsizing, or just aren’t sure what your team is going to look like in the future. The inconsistent pricing can lead to issues in budgeting, but it may not be a big issue to some teams. Keep in mind that the essentials plan is limited to 20 users, and 100 toll-free minutes, so as your team grows you will be forced into another option.

RingCentral can provide 24/7 support, but not for all of their users. If your team is taking advantage of the Essentials plan, you won’t have access to the same support as the other tiers of users. While there are a bunch of self-help resources available to all of their users, it is unclear what in person support is available outside of the 24/7 live support option.

RingCentral allows for a limited trial, with a maximum of five users and two desktop phones. This does allow you to test them out before you commit, but the whole team may not be able to experience and weigh in with their feedback.


Grasshopper is often seen as an excellent choice for businesses with 1-15 employees. While this may make scaling an issue in the future. However, if your SMB fits that profile, Grasshopper may be a great fit. Grasshopper is not a true unified communications system, and instead focuses on being a virtual phone system. This does help your team avoid paying for features beyond a business phone system that may not be necessary or a good fit for your team.

In terms of pricing and overall phone plans, Grasshopper does something interesting, which is including add-ons in an a-la carte style. Their “add ons” include things we consider to be essential, such as enabling international calling capabilities. You should make sure to check which features from their “add ons” list you consider to be essential, as this will significantly impact pricing. The free 7 day trial will give you exposure to the various features they are able to offer, which may help your team determine what would need to be added on and which features you can live without.

The different pricing plants include solo, partner, and small business plans. The solo plan is $29 per month, while the partner plan is $49 per month and small business is $89 per month. Each of these plans come with a set number of phone numbers, and extensions available. It does not appear that this plan is charged per user/per month. The limited extensions available may cause issues with your overall scalability, but for a small team looking for only the essential phone features and no other capabilities this may be a great option.

Grasshopper can give you access to a toll-free, vanity, or local phone number. They are able to port your existing business phone number, if you’d like to keep the number you are already using. You can get started today with a free 7 day trial.


When you are getting started with Aircall, you are able to take advantage of their live resources making it an easy to configure solution. Aircall appears to be compatible with most hardware solutions, and will provide business texting. One thing to be cautious of as a small business is that Aircall requires a minimum of three users. If you are a solo or partner based team, this may cause an issue.

Not all of Aircall’s features meet the more modern standards for phone communication systems. Their IVR system does not appear to be fully conversational, and instead relies on multi-level IVR routing configurations to be most effective. This may be a bit tricky to set up, and doesn’t eliminate the annoyance of listing to long menu lists. This means that as far as an auto-attendant, or virtual assistant goes, Aircall may not be a perfect solution. If you have a traditional receptionist, or aren’t interested in adopting a virtual receptionist, then this may not be an issue for you.

Aircall is consistently one of the most expensive VoIP services in the top rankings, which makes it not a great fit for many businesses. It is important to look at pricing for all solutions, but with Aircall make sure that you are really getting more with the increased pricing.

However, their entry plan will allow for integrations with more than 80 CRM and business apps, as well as a lot of other smart features. It seems as though their higher end support requires a more expensive plan to access, but they do have basic support capabilities across all payment plans.


When you are getting started with Dialpad, there are some support and configuration options. It appears that their top support channel is their 24/7 live chat. It doesn’t appear as though you can schedule a demo call, but that may be an option once you are an existing or trialing member. You are able to take advantage of Dialpad from a mobile device, or hardware phone.

Dialpad has a range of pricing options, but be careful because their pricing drastically changes the smart integrations available. The base price plans will come with G Suite and Office 365 integrations. However, if you want to integrate into your CRM and other business apps, it looks like you will need to pay for one of their higher end options. It is important to note that the base plan supports only one office location, and no desk phones.

When looking at Dialpad and the final pricing, make sure that you are considering the tools that your team already has and is taking advantage of. If you want to see the advantages that can come with integrating your phone, you may be forced to pay a higher price. To save money, you can pay annually instead of by the month.

It appears as though DialPad is able to offer virtual phone numbers, but their international phone number options were a little bit limited. It also appears that Dialpad can port your existing number, however on reliable review websites such as G2 it appears that the porting process has not been seamless for everyone. However, Dialpad is able to offer business text messaging, which as we’ve said can help open up a new channel of business communication.


While a somewhat popular option, we don’t think that CallHippo meets the bare minimum benefits of a cloud phone system. This may sound harsh, but CallHippo HEAVILY relies on a-la carte pricing to the point where their basic phone system really doesn’t provide much. When we say a-la carte pricing, it means that there is a simple base plan that you can adopt. However, individual features including some essential features may be available for a small additional price. However, when you start adding on new features, your expected cost will increase significantly. This can lead to a frustrating onboarding process, as you realize new features you may want, only increasing your cost.

Just to show you a few key features that are missing, did you know: CallHippo doesn’t allow you to connect to your hardware SIP phones? This means that if you already have hardware phones that you have bought, and that your team has loved, you won’t be able to continue to use them. CallHippo also appears to be missing even some of the most basic collaboration features, such as call whispering. These are functionalities that can’t even be added on!

If you do want to check out CallHippo, they do have a free trial where they MAY be able to help you determine which features you need before you get started, for a hopefully less confusing process. However, we really do feel that this overly complicated pricing structure will just lead to a disappointing outcome.

Frequently Asked VoIP Questions

Which kinds of businesses benefit most from a good phone system?

We believe that EVERY business needs to have an effective phone system in place in order to be successful. While that may sound dramatic, without a business phone system you won’t be as capable as your competitors in your ability to provide high quality customer service. While modern support options such as a live chat may be useful, phone communication is still an essential part of customer service, making a good phone system a necessity for all businesses.

How much does a phone system cost for small businesses?

Generally speaking, hosted VoIP solutions will range from $15-$40 per user, per month. The scalability of these systems are a great perk, as you are billed per user. This means you won’t be stuck with a large overhead cost that varies in value based on the size of your team.

For a landline business phone system from a reliable provider such as AT&T or Verizon, cost will start at $40-$60 per line, per month. Typically it will cost an additional flat rate to increase the number of lines available. You will also have to pay a hefty installation fee if you don’t already have the copper wires that these systems depend on installed.

While your business phone may be a monthly expense, it is a necessary one to provide professional customer service. But, it could be worthwhile to opt for the more affordable VoIP option, especially as you discover the other advanced capabilities that a VoIP system can offer.

What are the main differences between phone systems for small businesses and phone systems for large businesses?

We believe that the overall capabilities should remain the same, as small businesses should have the same opportunities to benefit from time-saving features and effective solutions.

However, one of the largest differences will simply be the number of users, or lines, that are necessary. Luckily with phone providers such as Yodel you can make unlimited concurrent calls, so you don’t need to worry about having “too many people” on the phone at the same time.

When is the best time to invest in a good phone system for your business?

Your business should adopt a phone system as quickly as possible, so that you can be in the position to connect with your potential and existing customers and clients. While it may seem like a large expense to invest in a good phone system from the start, having the right tools at your disposal will go a long way. We recommend that you adopt an intelligent and robust phone system in the initial stages of building your business.

What is the best business phone system?

The best business phone system will be the solution that fits your team’s needs. This means that it is a solution that is affordable for your business, provides the features and functionalities that your team has identified as being important, and is accessible on the devices that you wish to conduct your phone communication through.

We believe that is the business phone system that can meet the needs of any style or size of business. To learn more about how we can assist your team as they transform their phone into a best-in-class communication channel, schedule a demo call today!

Final Thoughts

We hope that you’ve been able to learn everything that you need to know about small business VoIP solutions and exactly what you should be looking for in a business phone system. With our handy guide, your search for a complete phone system that will ensure your small business has access to the perfect solution.

If you are looking to take advantage of a VoIP solution that is perfect for businesses of all sizes, test out with a free trial today. You can reach our team through individualized demo calls that will make sure that all of your business phone questions are addressed. The best part is? With no need to commit, or even put down a credit card, you can access a risk free trial. Get started with Yodel today, and see why thousands of teams of all sizes and styles trust us with their phone communication needs.

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