Do outside users in SharePoint need a Microsoft license? Explained 

Microsoft SharePoint excels in document management and collaboration, but how do you securely share files with people outside your organization? Do outside users in SharePoint need a Microsoft license? The answer depends on how they access and use SharePoint. Let’s break it down. 

Who are outside users in SharePoint? 

Outside users (also called external users) are individuals who do not have an account within your organization’s Microsoft 365 environment. These can be clients, vendors or partners who need temporary access to specific SharePoint files or sites. 

^{Do outside users need a Microsoft license?} 

The simple answer is no, outside users do not need a Microsoft 365 license to access shared SharePoint content. Microsoft allows organizations to invite external users as guests through Azure Active Directory B2B (Business-to-Business) collaboration. 

Here’s what you need to know :

• Guest users can access shared files or folders without a paid license. 

• They must log in with a Microsoft account (Outlook, Hotmail) or an Azure AD-associated work account. 

• Their permissions are limited—they can only view or edit what is explicitly shared with them. 

How to enable external sharing in SharePoint 

To allow outside users to access SharePoint, administrators must adjust sharing settings 

1. Go to the SharePoint Admin Center. 

2. Navigate to Policies > Sharing. 

3. Enable external sharing and select the level of access allowed. 

4. Set expiration policies for guest access if needed. 

When is a license required for outside users? 

While external guests can collaborate for free, they will need a Microsoft license if 
 

• They require full access to SharePoint sites instead of just shared files. 

• They need to use premium Microsoft 365 services like Power Automate, Power BI or Teams beyond guest collaboration. 

• They are assigned full user roles instead of guest access. 

Best practices for secure external sharing 

• Use expiration policies to limit access duration. 

• Enable multi-factor authentication (MFA) for guest users. 

• Regularly review and remove unused guest accounts. 

Conclusion

Outside users can collaborate in SharePoint without needing a Microsoft license, making it a cost-effective way to work with external partners. However, organizations should manage guest access carefully to ensure security and compliance. 

Need help setting up secure external sharing in SharePoint? Contact our team today! 

Check out the related blogs for further reading