On this page
- What each option means
- A virtual office
- A physical office
- Virtual vs physical office at a glance
- The legal rules that apply to both
- The registered office must be an appropriate address
- The provider must be supervised
- VAT needs your real place of business
- Where the work happens still matters
- When a virtual office makes sense
- When you need a physical office
- Using both
- Set up your virtual office
Where your business is based used to mean where you rented a desk. Today many companies run perfectly well from a laptop, and the question has split in two: where the company is officially located, and where the work actually happens. This guide compares a virtual vs physical office: what each one gives you, what it costs, the legal limits, and how many businesses end up using both.
What each option means
A virtual office
A virtual office gives your business an official address without a desk there. Typically it includes a registered office address for Companies House, a service address for directors so their home addresses stay off the public register, and mail handling, where letters are received, scanned and sent on to you. Some providers add phone answering or meeting rooms by the hour.
A physical office
A physical office is space you occupy: a leased office, a serviced office, a desk in a coworking space, or a room at home used for work. It is where you meet people, keep equipment and do the work.
Virtual vs physical office at a glance
Virtual officePhysical office CostA few pounds a monthRent, business rates, utilities and fit-out CommitmentMonthly or yearly, easy to cancelOften a lease of several years Official addressYesYes Somewhere to work and meetNo, or rooms by the hourYes Privacy for your homeYesYes, if you are not using home Flexibility to move or growHighLow during the leaseThe legal rules that apply to both
The registered office must be an appropriate address
Since March 2024, a company's registered office must be an "appropriate address": post sent there must be expected to reach someone acting for the company, and its delivery must be able to be acknowledged. A virtual office address meets this rule as long as the provider receives and handles your post. A PO box on its own does not. The address must also be in the same part of the UK where the company is registered.
The provider must be supervised
Businesses that provide registered office addresses are trust or company service providers under the money laundering rules, and must be registered for anti-money laundering supervision, usually with HMRC or a professional body. Expect a proper provider to check your identity before you start. If one does not, look elsewhere.
VAT needs your real place of business
When you register for VAT, HMRC asks for your principal place of business: where the business is actually run day to day. A mail-handling address is not that. If you work from home, give your home address for VAT, even if your registered office is a virtual office.
Where the work happens still matters
Planning permission, licences, insurance and business rates follow the place where work is done. Working from a spare room rarely changes anything, but seeing customers at home, storing stock or employing staff there may need checking with your council, insurer and mortgage lender.
When a virtual office makes sense
- you work from home and do not want your address on the public register
- you run the business from abroad and need a UK address
- you want a city address that matches how your clients see you
- you move around, or your team works remotely
- you are starting out and do not want to sign a lease
When you need a physical office
- customers or clients visit you
- you have staff who need to work together in person
- you hold stock, equipment or confidential files
- your licence or regulator requires premises
Using both
Many businesses combine the two. They use a virtual office as the registered office and mail address, so the official address never changes even when they move, and rent workspace only when they need it: a coworking desk a few days a week, or a meeting room for client visits. This keeps the public address stable and private while the real workspace stays flexible.
Our guide to virtual office benefits looks at the advantages in more detail.
Set up your virtual office
Our virtual office service gives you a London registered office address from £4.99 a month, with a director service address and mail scanning available, and we file the address change with Companies House for you. If you are forming a new company, you can add it during company formation.
