If you've spent any time researching business phone solutions, you've probably wondered about the various terms that have popped up. Business VoIP, cloud phone system, hosted PBX, UCaaS...these terms appear constantly, often on the same page, sometimes used as synonyms, other times treated as distinct categories.
So, which is it? Are business VoIP and cloud phone systems the same thing, or are they meaningfully different?
The short answer: they're largely the same, with a few important nuances worth understanding. Here's what you need to know.
What Is Business VoIP?
Business VoIP (Voice over Internet Protocol) is a type of phone service that transmits voice calls over a broadband internet connection rather than traditional copper telephone lines. Instead of routing your calls through the Public Switched Telephone Network (PSTN) the way analog systems have done for over a century, VoIP converts your voice into data packets and sends them over the internet.
For businesses, VoIP was originally positioned as the natural successor to the on-premises PBX (Private Branch Exchange). That PBX was a hardware-heavy system that required dedicated phone lines, costly maintenance, and the services of a trained technician every time you needed to add an extension or change a configuration. VoIP eliminated most of that overhead by running entirely over your existing internet infrastructure.
When businesses talk about ‘business VoIP,’ they're generally referring to internet-based phone service meant to replace what the analog PBX used to do: enabling internal extension dialing, call routing, voicemail, and the ability to connect to the outside world, all without the copper wiring and proprietary hardware of the past. The core business calling features that once justified the price tag of an enterprise PBX (auto attendants, call queues, conference bridges, and busy lamp field) are now standard-issue features found throughout VoIP services.
That accessibility has had a real leveling effect on the market. Small and mid-sized businesses can now access enterprise-grade communication tools without enterprise-sized budgets.
What Is a Cloud Phone System?
A cloud-based telephone system is, in nearly every practical sense, a business VoIP service. The distinction lies primarily in where the underlying infrastructure is managed and, increasingly, in how providers market their products.
‘Cloud’ describes the hosting model: rather than maintaining a physical PBX in your office IT closet, all the hardware and software powering your phone system lives in off-site data centers managed by your provider. You access everything over the internet, which means there's no on-premises equipment to maintain, no firmware updates to manage, and no PBX failures to troubleshoot on your end.
This is sometimes called ‘hosted VoIP,’ and the terms hosted, cloud, and cloud phone system are largely interchangeable. They all mean the same thing: the provider owns and manages the infrastructure, and you pay a monthly (or yearly) subscription to use it.
The ‘cloud’ framing has become popular because it signals something beyond a simple dial-tone replacement. Cloud services tend to emphasize broader communication capabilities—think of SMS/MMS messaging, video conferencing, real-time presence, and softphone apps that turn any laptop or smartphone into a full-featured business phone. This approach falls under the umbrella of Unified Communications (UC), which treats every internet-connected device as a potential endpoint.
So Why Are There Two Terms?
There's a loose conceptual difference worth noting:
Business VoIP tends to evoke the core function of replacing your phone lines with internet-based calling. It's the broadest category.
Cloud phone system tends to suggest a more comprehensive platform, one that goes beyond voice calls to include team collaboration tools, integrations with business applications, and unified communications across devices.
In practice, the line between these two categories has all but disappeared. Most business VoIP providers offer cloud-hosted infrastructure and collaboration features by default. And most cloud communication services are, under the hood, VoIP platforms.
The Bigger Picture: Unified Communications
The more meaningful category distinction today isn't ‘VoIP vs. Cloud.' It's where individual services fall on the spectrum from basic calling to full Unified Communications as a Service (UCaaS).
A UCaaS platform integrates voice, video, messaging, and file sharing into a single, cloud-delivered experience. Rather than managing separate tools for calls, business SMS, and video meetings, everything lives in one place. Employees can use softphone apps for audio and video calls, see real-time availability indicators for colleagues, and access the full service from anywhere with an internet connection.
What started as a way to simplify telephone infrastructure has become something much bigger: a wholesale rethinking of how organizations communicate internally and with customers.
What This Means When You're Shopping
Whether a provider calls their product ‘business VoIP,’ a ‘cloud phone system,’ or a ‘hosted communications platform,’ the most important thing is to evaluate the actual features and total cost of ownership.
Here's what to look for regardless of terminology:
Core calling features. Auto attendants, call routing, call queues, voicemail-to-email, and extension dialing should be standard inclusions, not paid add-ons.
Device flexibility. Can your team use desk phones, softphone apps, and mobile devices interchangeably? True cloud systems make this seamless.
Integrations. The best cloud phone platforms connect with the tools your team already uses, like CRMs, helpdesk software, and productivity suites. OnSIP integrates with platforms like Odoo, Zendesk, and HubSpot, for example.
Scalability. A scalable business phone service will let you add or remove users in minutes, without requiring a service call.
Total cost. VoIP and cloud systems can significantly reduce monthly communication spend compared to traditional phone services, but pricing models vary between providers. Look for transparent, per-user pricing without hidden fees.
Cloud Phone Systems and Business VoIP: Two Terms, One Technology
Business VoIP and hosted phone services describe the same fundamental technology: voice communication delivered over the internet, hosted and managed off-site. The difference is mostly semantic, with cloud services tending to emphasize a richer set of collaboration features and a fully hosted delivery model. When evaluating your options, focus less on what providers call their product and more on whether the features match your team's actual needs.