First, what is a virtual office?

A virtual office is one where a company has all the appearance of operating from a physical address, without actually being there.

'Company A' lets 'Company B' use its address for their correspondence. Company B gets a telephone number in the same area code as Company A. It uses Company A's building address on its letterheads and website. Letters that arrive at Company A's building, which are addressed to Company B, are forwarded by Company A to wherever Company B is operating from.

Thus Company B can have a presence in an upmarket area of an important city, without have to go to the trouble and enormous expense of actually opening a branch office there.

Isn't this a bit deceitful, you say?

Perhaps.

Companies have long had registered offices which are different to where their operating base is. A Registered Office is the address where the company is located for the purpose of serving legal documents upon it. A company exists as a separate body in law. In a way it's a person like you or me.

A company has to have an address where it has a physical presence; it can't only exist in cyberspace. So virtual office companies offer this facility. Directors don't want marketers, bailiffs or other nuisances bothering them and their family at their home address. They often don't need to rent an actual office either; they might work from home.

So they pay a monthly or yearly fee to another company to rent their address. Accountants will often offer this service to their clients.

Then there are companies whose whole business is offering the virtual rental of their offices to small companies and sole traders. They get a rental fee and the small businessman gets an address which safeguards his home address and makes him look 'bigger' than he actually is.

For practical purposes, this doesn't matter to customers. They need an address to send letters to Company B. As long as Company B gets the letters, everything is fine.

The other benefit to Company B is that it's not tied into a lease on a property. It can move anywhere it wants and keep the same address on its stationery and website. This saves a huge amount of money.

Another reason for having a virtual office is to make it easier for clients to send you letters. It costs a lot to send a letter to a foreign country. With a virtual office, they can contact you in their own country. Company A may also offer meeting rooms to rent, by the hour. So Company B's client can meet them in their own city, at a nice location.

It's simply not possible for a lot of small businessmen to maintain their own offices and for many it's unnecessary. There's nothing they could do at a separate office that they couldn't do in their own home. It doesn't make financial sense to maintain a separate office. Virtual office services satisfy this need.

So what should you look for in a virtual office provider?

You should do due diligence: How long have they been in business? How much detail is on their website? Give them a call; how professional do they sound? Are they mentioned anywhere else on the internet; what are people saying?

Then it comes down to: Services offered, their price and where they're located.

Some virtual office providers are high-end and with prices to match. Some are operating out of a shoe-box and will be gone in 6 months time. You need to balance saving money with being reassured that your letters will still be forwarded from the same address a year from now.