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If you’re a startup or new business you might be worried about taking the financial leap of investing in a dedicated physical office.

Rented office space often constitutes the largest expenditure of small businesses, with the combination of high rents and utilities costs adding up to thousands of pounds every year.

Fortunately, there are other options to renting physical office space: virtual offices and PO boxes.

In this comparison, we’re going to take a look at the PO box vs virtual office address debate in detail, including the benefits and disadvantages, as well as the legal implications you need to consider.

Definitions

Before we dive in, let’s define what a PO box and virtual office actually is.

What is a PO Box?

You’ve probably heard the term before, but what is a PO box and how do they work?

Also known as a post office box, a PO box is a service provided by the post office.  Although useful for some business needs, it is important to note that PO boxes are not valid for company registration.

It is a secure, private box that companies can rent on a monthly or annual basis to have business mail and parcels sent to instead of a physical address. They are usually located in Royal Mailing sorting offices or post offices and are accessible during their opening hours, although some locations do offer 24-hour access.

What is a virtual office address?

Similar to a PO box, a virtual office address provides businesses with an official company address for receiving mail and promoting publicly, without the need for a physical office.

However, unlike a PO box, in addition to mail handling there are a range of additional virtual office services that businesses can take advantage of to help them operate remotely and reduce the need for investing in a dedicated physical office. For this reason, a virtual office is one of the most popular PO box alternatives in the UK.

Address type

Although both virtual offices and PO boxes provide businesses with ‘virtual’ addresses in the absence of a genuine physical office, there’s a key difference between the types of address you can get.

While a virtual office will have an actual street address, a PO box is clearly just a PO box, potentially harming the credibility and professional image of your business. For example, Hoxton Mix customers benefit from a virtual office address in a prime London location, without the overheads associated with renting an actual office in the city.

Business registration needs

When registering your new business with Companies House and HMRC you must use a genuine UK address—but PO boxes are not valid for company registration. This means you would have to use your home residence instead, making it publicly available to customers, suppliers and investors.

However, you can use a virtual office address for company registrations, even though your business isn’t actually based out of that address, as it is a genuine physical address. This allows you to use your virtual office address for company formation and official business correspondence, as well as the address you list on your website, invoices and all other public-facing collateral.

Mail handling capabilities

Virtual office services typically offer a range of mail handling options, depending on your requirements and budget.

Our Virtual Office mail handling service, powered by our AI Mail Management assistant HaiRoTM, will organise, digitise and deliver your post, with the option to have the physical mail forwarded to your home address, scanned copies sent to your email inbox, or you can simply collect your post from our central London location.

By comparison, the Royal Mail offers two PO box plans:

• PO Box Collect—collect your mail from your Customer Service Point.
• PO Box Deliver—your business mail will be delivered to your home address.

Note that with a PO box, there’s no option for receiving digital copies of your mail. 

We’ll cover the costs of PO box and virtual office address pricing in the section below, ‘Cost efficiency and overhead costs’.

Flexibility

We’ve already touched on one way in which virtual office addresses are more flexible than PO boxes, with the former allowing you to receive scanned digital copies of your business correspondence instead of (or as well as) the physical post.

What’s more, the contract terms of a virtual office are often more flexible. Although Royal Mail offers monthly plans for their PO box service, there is however a minimum requirement of at least three months, while you’ll also have to pay more per month if you want to take advantage of these more flexible contract terms.

By contrast, Hoxton Mix’s rolling contracts mean customers can cancel at any time if they’re unsatisfied, while it’s easy to scale up or down to suit your needs. Virtual offices can also be set up incredibly quickly, and you can secure your brand new virtual office address online within minutes.

Virtual office addresses are also much cheaper than a PO box, which we’ll examine in closer detail in the next section.

Cost efficiency and overhead costs

Both virtual offices and PO boxes help you to avoid the high overhead costs of running your own office, but when it comes to a comparison between the two there’s really only one winner.

While a PO box is available from £45/month on a monthly plan (it’s the same cost for both the Deliver and Collect packages), our virtual office plan from Hoxton Mix starts from just £19/month, and includes everything you need to set up and run your virtual business address.

You can save on the monthly cost of a PO box if you choose for a 6-month or 12-month contract term (it’s £36.10/month and £30.95/month respectively for the PO Box Collect plan), but this still represents a significantly higher cost than compared to virtual office address pricing—without some of the additional benefits they provide.

Note that neither PO boxes or virtual offices have any set-up fees or upfront costs, while there are also no postage charges—the monthly cost is all you will have to pay.

Privacy and security

Both PO boxes and virtual office mail handling services will store your business correspondence securely, but in terms of the impact on your privacy, a virtual office address has a distinct advantage.

That’s because your business cannot be registered using a PO box, meaning you would have to use your home residence instead—and this will be publicly available on Companies House’s records.

With this in mind, unless you want to run the risk of disgruntled customers or creditors turning up at your family’s home, registering your business with a virtual office address is the best option.

Additionally, with Hoxton Mix’s virtual office product, once your mail has been digitised and tagged, it will be securely shredded within 30 days.  You will never lose a piece of correspondence again.  With a PO box you are reliant on the usual issues surrounding physical mail.

Professionalism and business presence

The official address of a small business can make a big difference to whether customers perceive you as professional and established, or potentially unreliable.

A virtual office address solves that problem by providing you with a genuine physical address in the UK, often in a prime city location. However, a PO box doesn’t offer the same level of prestige because it’s clear from the address that you’re using a PO box. Below is an example PO box address:

Your Company Name
PO Box 123
City
Post Code

Although PO boxes are widely used and arguably more trusted by consumers than a home address in a residential area, it still marks out your business as one that doesn’t have a physical HQ.

Compliance and legal considerations

For the following legal reasons, a virtual office address is the only compliant alternative if you want to avoid having to use your home address when registering your new company. A PO box is not a legally accepted option and carries heavy fines for use as such.

The Economic Crime and Corporate Transparency Act 2023, a PO box cannot be used when registering with Companies House or HMRC, with company directors subject to fines or even criminal prosecution if they use a PO box address.

Companies that had previously registered using a PO box had until 4th March 2024 to update their registered office address to a physical address or face non-compliance penalties.

Additional features and services

PO boxes from Royal Mail offer very limited services beyond having your business correspondence stored securely for collection or forwarded to a location of your choice.

In comparison, however, a virtual office address service provides enhanced features and services that are well beyond simple physical mail delivery. They will even make your business easier to run and manage.

At Hoxton Mix we also offer a virtual London phone number to go along with your virtual London office address for less than £6/month, as well as meeting room hire by the hour to hold meetings with clients, employees or other important third-parties.

What’s more, we also boast a comprehensive Marketplace or service partners to help scale your business even further. This includes business banking, IT services, legal services and much more.

Final thoughts

While virtual office addresses and PO boxes have a similar primary purpose—to provide small businesses with an alternative to receiving all of their business mail to their home address—we believe that the benefits of a virtual office far outweigh those of a PO box.  And the costs speak for themselves, making the virtual office a clear winner.

From the lower cost and greater flexibility, through to legal compliance and additional services, a virtual office offers so much more for growing businesses in the UK.

To find out more about getting started with a virtual office address from Hoxton Mix get in touch with our dedicated team today on 020 3475 3374 or help@hoxtonmix.com. Alternatively, you can click on the magnifying glass in the bottom right of this screen and search for the answers to any questions you might have.