{{ __('Skip to content', 'foundations') }}

Virtual Office vs. Physical Office: How Are They Different?

If the pandemic has taught us anything, it’s that businesses don’t always need a permanent physical office to be successful. 

But now that the business world is returning to normal, how do you proceed?

We have gotten these questions quite frequently from business owners who are still pondering whether or not they should rent traditional office space: 

“What’s the difference between a virtual office and a physical office?”

“Is it possible to use a virtual office as a physical office?” 

“How do I know which office style is best for my business?”


“Do startups even need an office?”

If you’re wondering whether it’s best to opt for a virtual office or rent a physical office, we’ve got you covered.

In this post, we will explain what virtual and physical offices are and provide a breakdown of the pros and cons of each of them. 

Table of contents:

1. Virtual office

2. Physical office

3. Which option is best for your business?

1. Virtual Office

Team Working in a Virtual Office

If you are not familiar with the virtual office model, the phrase “virtual office space” may sound like a virtual reality space where team members collaborate in a simulated environment. 

But the truth is, a virtual office isn’t actually virtual. 

Believe it or not, virtual offices are real offices that come with genuine addresses you can use to register your business or update ASIC details.

For a flat monthly rate, premium virtual offices provide you with essential services such as a virtual receptionist, mail handling services, and on-demand meeting rooms.

The only difference is that employees might work at home remotely while they’re scattered around the globe.

However, prospects and customers who see that you’re registered in a premium location will think that you are based in a business centre or permanent brick-and-mortar location. 

Put simply, virtual offices operate as one unit to support your business. They exist in a fixed location but do not require you to commute to work on a daily basis. 

Businesses that opt for a virtual office can benefit in the following ways:

  • Reduced overhead

With a virtual office, you don’t have to factor rent, equipment, maintenance, or cleaning services into your budget. As an estimate, you can expect to pay anywhere between $40 and $150 per month. For example, here at B2B HQ, we offer virtual office packages starting from $57.5 per month. This means you save between 90 and 95% of the office costs as compared to renting physical office space. 

  • Flexibility

Unlike physical offices that tie you to a permanent location, virtual offices allow for flexibility by eliminating the need for a permanent office location. Plus, flexible office spaces   

come with a short-term lease which enables you to use the service on a monthly or on-demand basis instead of getting locked in a long-term commercial lease. 

  • Access to worldwide talent

Hiring remotely provides access to a wider pool of skilled workers, possibly in another country with lower wages and less payroll tax. While a traditional office only enables you to have people who are from your area, hiring remotely means you can build a team with the best functional expertise from around the world. 

  • Easy scaleup

A virtual office allows you to scale up your business without the need to move to new premises. Typically, virtual offices come with customisable packages so that you get the services that fit your business needs. Plus, you can use a virtual office as a branch office and conduct operations in a location other than the one in which your business is headquartered. 

  • No commute

Since you have no brick-and-mortar office that ties you to a fixed location, you have no commute. Not only does that make your office environmentally friendly, but it also saves you time as you do not have to sit in bumper-to-bumper traffic or squeeze into crowded buses. Plus, you’ll have more time to dedicate to growing your business and generating greater ROI.   

2. Physical Office

Virtual Office Collaboration

A traditional physical office needs little explanation. It is the actual brick-and-mortar office in which people work during business hours, and we’re all familiar with.  

While it’s true that the pandemic supercharged remote work and changed how we think about offices, many businesses still prefer in-person collaboration to get the job done. 

This is because meeting and connecting with people face-to-face helps foster a sense of belonging and strengthens workplace culture. 

According to a Glint survey, the impact of belonging on employee happiness increased in strength by 12% after the pandemic outbreak in 2020. 

These spaces allow staff to separate their personal and professional lives and work in an environment that instils your company’s values in your team.

Benefits of a physical office include: 

  • A sense of community

We humans are social beings who have a fundamental need to connect with others. According to an article published by McKinsey, the ability of a business to retain employees is strongly related to its approach to building community. Giving team members the opportunity to gather in the office gives them a place for social interaction and fosters a sense of community and connection.   

  • Streamlined onboarding

When hiring new employees, going over essential processes in person helps them better absorb and retain new information. Of course, that doesn’t mean you can’t successfully onboard remote employees. However, it is easier for new hires to pop their head in the next office and get the answers they need right away. 

  • Improved accountability

Let’s admit it – all of your team members have personal hobbies and goals, which is fantastic. However, if they focus more on their interests than work duties, productivity lags behind. But if they all come to perform their work from a physical space, they have no choice but to focus on the tasks at hand. That makes it easier for you to keep an eye on team performance. 

  • Team building 

Team members who work in the same physical space have the opportunity to know one another more personally. This, in turn, facilitates social interactions and creates stronger bonds between team members as they meet at the vending machine or celebrate a colleague’s birthday with cake.   

  • Equal working conditions

Another benefit of having a traditional brick-and-mortar office is that it ensures all team members enjoy equal working conditions. Sometimes, poor work-from-home setup leads to a decrease in productivity at home. In that case, businesses are expected to provide everything employees need to perform their work, including laptop, smartphone, printer, desk, chair, and more. 

3. Which Option is Best for Your Business?

Brainstorming Ideas in a Virtual Office

Now that you know the pros of each office style, you might ask yourself, “What should I opt for?

When deciding between a virtual office and a traditional office, it ultimately depends on your business model and what startup development stage you’re at. 

If you’re just starting out and operating on a shoestring budget, fully equipped virtual office spaces (like B2B HQ’s virtual offices in Melbourne) may be the best choice. 

Virtual offices allow you to save tons of money on overhead while still having a professional business address so as to build reputation and a legitimate image. 

Even if physical offices allow for more social interaction, ask yourself, would you get locked into a long-term expensive commercial lease just to build culture through face-to-face connections?

Or, would you rather set up a virtual water cooler to give your remote team members a chance to bond with each other?

However, if you run a more established business, a traditional office may be the right choice. Or, if you need your staff to regularly collaborate and interact in person, you may want to consider renting physical office space.

While both virtual offices and physical offices come with great benefits, make sure you consider all factors before making a decision and choosing the option that best fits your needs.

Holding a Meeting in a Virtual Office

Conclusion: Once you weigh the pros and cons, know that B2B HQ can help you set up your virtual office within 24 hours. With our virtual packages, it’s never one-size-fits-all. We know that your company is unique, so we work to provide you with customised solutions that will allow you to best fit your business needs.

 From business address to permanent landline to meeting rooms and boardrooms, you get everything your business needs to run properly without the need to pay high overhead costs. Contact us today to get started.   

15 Unexpected Benefits of Virtual Receptionist Services
Why Home Office Meetings With Clients Are Killing Your Business