If you’re on the hunt for a virtual address, you probably have a business that you either run remotely on the go or from a home office — you know it can provide you with the option to register your business in a different location without the need to rent additional office space and may give you a way to access your mail remotely (when virtual mail is part of the package).
But, what is a virtual address…exactly? Here, I lay it all out:
- What is a Virtual Address & How Does it Actually Work?
- How to Get a Virtual Business Address
- Why do people use virtual addresses?
- Frequently Asked Questions
- Final Thoughts
What is a Virtual Address & How Does it Actually Work?
If you’re a small business owner or freelancer who works from home, a virtual address can be a great solution to receive mail and packages. A virtual address is a service that gives you a physical mailing address that is not located at your actual physical location.
When you sign up for a virtual address service, you’re given a physical street address in a location that’s usually known as a commercial zone. After your account is established, the virtual address staff will receive and sort your mail and packages at that location before they are distributed to you.
There are a few options to retrieve your mail from a virtual address:
- Have your mail forwarded to your actual physical location
- Pick your mail up at the “virtual” address location
- Access your mail remotely through virtual services (not available with all providers)
*Some virtual address providers can even receive and deposit checks on your company’s behalf.
Virtual addresses can help you maintain a professional image by providing a separate mailing address for your business — this is especially useful if you work from home and don’t want to use your home address as your business address.
Moreover, virtual addresses can be great for remote businesses and those with staff members who work from different locations because you can streamline mail handling and reduce the need for each person to have their own mailbox.
Can I use one virtual address for multiple LLCs?
Whether or not you can use a single virtual address for multiple LLCs depends mostly on the service provider and their policies. Some virtual address providers allow you to use a single virtual address for multiple LLCs or companies, while others may require a separate virtual address for each legal business entity.
While using a single address for more than one business is okay in general, you’ll need to check with the virtual address service provider before signing up to ensure that their policies align with your business needs. And, you should expect additional fees for each LLC or entity that you want to use the virtual address for.
Also, keep in mind that using a single virtual address for multiple LLCs may not be ideal from a legal and compliance standpoint. Each LLC should ideally have a unique business address that is used for official correspondence.
But, don’t fret! While you should always check with an attorney before establishing multiple businesses at one address, the fix might be super simple.
A solution that I often see for multiple home-based businesses at a single location (and this may or may not be in compliance with all virtual address providers) is to append a distinct apartment or suite number for each business.
In practical application, it usually looks something like this:
|Action Consulting LLC||Action Management LLC||Action Limited LLC|
|123 Jerry Drive, Suite A||123 Jerry Drive, Suite B||123 Jerry Drive, Suite C|
|Smalltown, Nebraska||Smalltown, Nebraska||Smalltown, Nebraska|
And, you don’t have to build multiple suites to append a suite number to an address, so there’s no construction involved with this solution. You will have to check with your virtual address provider to see how they can work with you.
What’s the difference between a virtual office and a virtual address?
Now, a virtual address and a virtual office are two different services that can help businesses operate more efficiently, but they offer different levels of support.
A virtual address provides businesses with a physical mailing address that is not located at their actual physical location.
On the other hand, a virtual office provides businesses with a physical address and a suite of services that go beyond just a place to send and receive mail. While all offers vary, most virtual offices provide a business phone number, live receptionist services, and access to shared office space or meeting rooms.
Think of a virtual address as a post office box, while a virtual office is like a full-service office…without the physical space. While both virtual addresses and virtual offices can help businesses streamline their operations, a virtual office typically offers more services at a higher cost than a virtual address service.
How to Get a Virtual Business Address
If you’re looking to get a virtual business address, there are a few options available to you.
- Virtual office service provider
- Coworking space add-on
- Mailbox rental
Your first option is to use a virtual office service provider. These providers typically offer a range of services, including a virtual business address, mail handling, and sometimes even access to meeting rooms and other office facilities. You can usually sign up for these services online, and they can be a great way to establish a professional business presence without the overhead costs of traditional office space.
Another option is to use a coworking space that offers virtual office services. Coworking spaces are shared office spaces where you can rent a desk or office on a flexible basis. Many coworking spaces also offer virtual business addresses and mail handling services, so you can use their address as your business address without having to physically be there.
Finally, you could also consider using a mailbox rental service. These services provide you with a physical mailbox at a commercial location, which you can use as your business address. They typically offer additional services like mail forwarding and package acceptance, which can be useful if you’re running a remote business.
Why do people use virtual addresses?
So, using a virtual address has a ton of benefits for small business owners and entrepreneurs.
First and foremost, it helps to establish a professional image. By having a separate physical mailing address, you can project a more professional image to your clients and customers. This can lead to increased credibility and more business opportunities.
Next, using a virtual address can help protect your privacy and reduce the risk of identity theft. By keeping your personal address or home address separate, you can keep your personal information private and avoid unwanted solicitations. This can give you peace of mind and help you focus on growing your business.
Then, a virtual address offers more flexibility than traditional office space. You can operate your business from anywhere and still maintain a physical mailing address for packages and mail. This means you can be more mobile and flexible while still keeping your business running smoothly.
Additionally, using a virtual address can save you time and increase convenience. You can receive and manage mail and packages more efficiently by having them forwarded to any location. This saves you time and the hassle of missed deliveries or long trips to the post office.
Last but not least, using a virtual address is a cost-effective alternative to renting a physical office space. It’s more affordable and doesn’t require long-term leases or maintenance costs. This can help you save money, especially if you’re just starting a business.
Can you build business credit with a virtual address?
While a virtual address can provide a ton of benefits for small business owners and entrepreneurs for mailing purposes, it is not the best option when it comes to building business credit. This is because many banks and lenders prefer to see a physical address as the main business address, as it provides a greater sense of permanence and legitimacy.
In fact, using a virtual address as the main business address could actually hurt your chances of building business credit, as it may raise red flags with lenders and other financial institutions. Many virtual addresses are flagged due to concerns around legitimacy and credibility, which can make it harder to secure loans or credit lines.
That being said, it’s not impossible to build business credit using a virtual address, but it’s important to make sure that you have a physical address that can be used as the main business address (even if you also have a virtual address for mailing purposes).
A physical address can help to establish greater credibility and legitimacy with lenders and other financial institutions.
Does IRS accept virtual addresses?
While the Internal Revenue Service (IRS) encourages taxpayers to use more digital self-help tools (they’re becoming more and more tech-friendly), the short answer is “no” — the IRS still requires taxpayers to provide a physical mailing address on their tax return, which is different from a virtual address.
So, while you can use a virtual address as your mailing address for other purposes, it cannot be used as a substitute for a physical mailing address on your tax return.
If you try to use a virtual business address instead of a physical address when filing your taxes or communicating with the IRS, there is a possibility that the IRS may flag your tax return or request more information. They may compare the address you provided with other information in their database, such as your Social Security number (SSN), employer identification number (EIN), and other identifying information.
At this, the IRS may also request additional documentation or proof of your address, such as utility bills or rental agreements, to verify the accuracy of the information you provided.
Moreover, if the IRS needs to send you any physical correspondence, such as a notice or audit letter, and the virtual address you provided is not recognized as a valid mailing address, it may delay the delivery of important information.
And, intentionally providing false or inaccurate information to the IRS, including your address, can result in penalties and fines.
Frequently Asked Questions
What address should I use for my EIN?
You should use your physical business address for your legal business entity registration and when applying for an EIN. If you run your business from home, consider appending a suite number to your business registration to avoid confusion.
How do I get a US address without living there?
To keep an operative address in the United States while living abroad, use a virtual address service that you can activate online. Be sure that the service provider offers mail forwarding or remote access to your important documents.
To sum up, a virtual address is a game-changer for small business owners who want a professional image, privacy, flexibility, and efficiency without the need for a physical office. It’s important to choose a reliable provider and consider compliance implications before using a single virtual address for multiple businesses.
Remember, while using a virtual address can help streamline your operations, a physical address is crucial for building business credit and keeping the IRS happy. So, choose wisely and take your business to the next level!
Do you want to learn how to get up to $100K in business credit in as few as 30 days…without showing financials? If so, join Business Credit Workshop today.