3 Benefits of Business Addresses for Startups

Startups Spiking in Recent Years

During the first half of 2022, over 817,000 applications were filed to form new businesses likely to hire employees. The pandemic served as a positive boost to Americans seeking to launch new businesses. Job losses in certain sectors were a key factor driving professionals to form businesses. Other issues such as new economic opportunities as a result of changing consumer preferences and supply chain issues were also factors.

These businesses simply add to a large number of startups in the world and the U.S. When it comes to startups, the U.S. outranks the rest of the world with a total startup score of 195.37 (StartupBlink). In terms of cities in the U.S., San Francisco tops the list, by far, with a score of 550.97, followed by New York (217), Los Angeles (113.86), Boston (108.05), Seattle (51.96), Chicago (40.97), and Washington DC (34.96).

List of “To Do’s” for Startups

For new startups, a long list of “to do’s” can suck up valuable time and resources. The Small Business Administration lists 10 steps for starting a new business:

1. Conduct market research

2. Write a business plan

3. Fund the business

4. Select a business location

5. Choose a business structure

6. Choose a business name

7. Register the business

8. Get federal and state tax IDs

9. Apply for licenses and permits

10. Open a business bank

But this list is just the basics. There are a number of other things that a new business needs to think about. Unless you’re a business in the travel, hospitality, and retail industry, deciding where to work and what address to use for your business is important. 

Limitations of Permanent Offices for Startups 

Many startups assume they need a permanent office and address. Doing so comes with its challenges, however. Permanent office space is expensive and leases extend for multiple years—locking businesses into a location and constraining growth beyond what the space will accommodate. On the same note, businesses often must lease more space than they require due to the need for scale. 

Instead of turning to permanent office space when a business is just starting out, startups are increasingly using coworking space and day offices. For example, one study found that 27% of startups and 16% of freelancers use them today. And as the pandemic dissipates, signs indicate that the number of startups embracing coworking space and day offices will grow. Other startup freelancers simply choose to operate their businesses from home offices. Indeed, the U.S. Small Business Administration Office of Advocacy finds that half of businesses are home-based businesses and that half of small businesses start at home.

Startups with a permanent office still require a business address. Virtual office addresses are a great option. Even for startups with permanent office spaces, virtual addresses are a good consideration. Many startups are in locations that don’t garner the respect startups need to convey, and virtual business addresses provide an immediate positive first impression. This is especially important for a new startup. 

Benefits of Business Addresses for Startups

So, what are some of the key benefits of virtual business addresses for a startup? 

1. Brand Impressions for Startups

First impressions certainly are important for a startup. Legal, sales, and often marketing documents require a physical mailing address. For example, when forming a business entity, startups must comply with state and local government jurisdictions that require new businesses to supply an address. These are public records. Contracts and legal agreements with customers also require an address. 

Some startups elect to use home mailing addresses. Yet, doing so creates questions on the part of clients. They interpret a home address as lacking the formal and professional attributes of a real business. But when startups register their business for legal formation using a virtual business address, their home address remains private. Likewise, they deliver a great brand first impression when using a virtual business address. Virtual business addresses also give startups a listing in a lobby directory and lobby greeters in the location where their virtual business address is listed.

2. Startups Keep Home Residences Private

By using virtual business addresses, startups keep their home residences private. They do not need to worry about clients showing up at their doorsteps unexpectedly, interrupting dinner or time with their families. They also do not need to worry about mentally unhinged clients arriving at their door at all hours of the day or night. 

3. Startups Realize the Benefits of the LLC

Using a virtual business address rather than a home address for business formation also enables startups to realize the full benefits of forming an LLC or corporation. Specifically, the benefits afforded to a business via an LLC can be lost if a court deems that business and personal activities are intertwined. Using a home address for an LLC formation is one of the factors a court can use to reach this conclusion. 

Getting Started with a Virtual Business Address

There are other benefits connected to the use of a virtual business address. SEO rank—and Google My Business listings—can be negatively impacted when a home address is used. For startups with owners who live in apartments and certain condominium and townhouse communities, homeowner associations (HOA) may prevent them from using home addresses; in these instances, virtual business addresses give them a great alternative. Startups seeking to realize the benefits of virtual office addresses can start with Davinci Virtual Office Services.

About Patrick Spencer

Patrick Spencer (Ph.D.) is the President and Founder of TIRO Communications that helps companies develop, build, and manage content, customer, advocacy, and demand-gen programs. Included in its offerings is TIRO Cognition Insights, a data analytics tool that enables B2C and B2B businesses to pinpoint what their customers and competitors’ customers are saying and to identify corresponding actionable product, services, competitive, sales, and marketing intelligence.

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