Unless you actually own the entire server and are collocating it, the easy answer is no, it doesn’t really matter where your website’s server is. But when it comes to the physical location of your web host, there are a few reasons to choose one within your country, if not your city.
You might be able to find a great deal on web hosting in the United Kingdom, even though you’re located in Canada, but opting to go outside of the country isn’t always a great idea. For starters, different countries have vastly different laws on not only websites and web data, but also for different industries, particularly when it comes to buying and selling information. When you take web hosting outside of your country and the laws you’re familiar with, your website could inadvertently be running illegal content in the hosting country. Not to mention that dealing with a web host halfway across the world is going to be inconvenient at best.
Once you’ve narrowed the location of your web host down to your own country, the best advice is still to keep them as close as possible. Having a web host, and therefore your actual website, physically close to you has a number of advantages. Firstly, Google does take the geo-IP of the server into consideration when ranking different websites and pages. If there’s a long way for data to travel it could affect the ranking slightly, whereas Google will prefer the data of sites that doesn’t have long to travel.
SEO strategies can also suffer if the web host and server aren’t physically close to you. This is because while you might be using keywords such as “ABC Business, Buffalo, New York,” if the server has a different address, that SEO tactic might not be as effective because the two sides of it won’t match up.
If you’re going to be moving your web host outside of the city in which you live, it’s a good idea to consider the physical factors of that location. If it’s prone to natural disasters such as flooding, earthquakes, or tornadoes, you might want to consider choosing a web host in a different area.
Many website owners will never have to actually visit the server that stores their website and so in theory, the location of that server shouldn’t matter a great deal. But the chances are good that your website will benefit from having the server relatively close to you.