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Split image: left side, people collaborating using SharePoint; right side, man leaving office with files moving to OneDrive, symbolizing data transfer or employee departure.

SharePoint vs OneDrive: Where Company Files Should Live (and What Breaks When Someone Leaves)

By Jason Russell · October 21, 2026

The pattern I see most often goes like this. A long-time employee leaves on good terms. A few weeks later, someone needs the vendor contract, the pricing spreadsheet, or the folder of signed engagement letters. All of it lived in that person’s OneDrive, and nobody else ever had a copy.

The SharePoint vs OneDrive question sounds technical, but it mostly isn’t. Both come with Microsoft 365, and both sync to your computers through the same OneDrive app. The difference that matters is who owns the file: one person, or the business.

Below I cover what each one is for, what happens to OneDrive files when someone leaves, why Teams already keeps your files in SharePoint, the sync limits worth knowing, and a simple rule for where each kind of file belongs.

SharePoint vs OneDrive: the difference is ownership

OneDrive is one person’s storage. Microsoft’s OneDrive service description calls it storage “provided for individual licensed users” and “designed to serve the needs of individual users.” Files there are private unless that person decides to share them.

The same service description goes further. Storing “departmental and organizational level data” in OneDrive “is not supported,” and Microsoft points to SharePoint for files shared across a team or organization.

SharePoint is organized into sites, and each site holds document libraries. Think of a library as a shared drive with version history. Access comes from membership: people are added to the site, or to the team that owns it, instead of one person sharing files a link at a time. Underneath, it’s one platform. Microsoft describes OneDrive as part of your organization’s SharePoint environment.

Part of how company files end up in OneDrive is a good setting. Known Folder Move redirects each person’s Desktop and Documents folders into their OneDrive, so their files are saved to the cloud and available from any device. It also means every company file someone saves to their desktop now sits in a personal account.

Question OneDrive SharePoint
Who owns it One person A team or the whole business
Who sees files by default Only the owner, until they share Members of the site or team
Storage on Business plans 1 TB per user 1 TB plus 10 GB per license, shared
When the person leaves A countdown starts Nothing changes
Best for Drafts and personal working files Client, project, and company records

Storage figures are from Microsoft’s SharePoint limits and OneDrive service description pages, as of October 2026.

What happens to OneDrive files when someone leaves

This is where the difference stops being academic. I covered offboarding more broadly in my post on the Microsoft 365 employee lifecycle, so here is only the part that affects files.

If you delete the account, Microsoft keeps that person’s OneDrive for 30 days by default, and an admin can set that anywhere from 30 to 3,650 days. Access goes to whoever is listed as their manager in your directory, or to a secondary owner you’ve designated. If neither is set, or that automatic hand-off is turned off, Microsoft says no one gets automatic access or a warning before deletion. When retention ends, the OneDrive sits in a recycle bin for 93 days, and nobody can open anything that was shared from it.

If you only remove the license, which is the common money-saving move, that deletion clock never starts. Microsoft’s unlicensed account rules apply instead: the OneDrive goes read-only after 60 days and is archived after 93. Since July 1, 2026, an unlicensed account that stays unpaid also becomes subject to deletion after 365 cumulative unpaid days. Assigning a license again brings it back.

A longer retention setting buys less than it sounds. A deleted user’s OneDrive counts as unlicensed, so Microsoft archives it on day 93 even if retention runs longer. Reactivating an archived OneDrive whose user was deleted runs through pay-as-you-go billing. As of October 2026, Microsoft lists a $0.60 per GB reactivation fee, and once billing is on, $0.05 per GB per month for every unlicensed OneDrive in your organization past 93 days, not only the one you needed.

The rescue has gotten easier: a manager can now move a departing employee’s files to a SharePoint site and keep the existing sharing in place. Microsoft Lists and Forms don’t transfer with that tool, though, and it’s still a rescue on a deadline.

Compare all of that with one line from Microsoft’s instructions for deleting a user: “You don’t need to move their SharePoint files; you’ll still have access to them.” That sentence is most of this post.

Why your Teams files already live in SharePoint

If your office uses Teams, you’ve been using SharePoint whether you meant to or not. Every team gets a SharePoint site created automatically, and files uploaded to its channels are stored there. Standard channels share the team’s site; each private or shared channel gets its own. Access to the team’s site follows team membership, through the team’s Microsoft 365 group.

That’s why channel files survive turnover. They belong to the team.

Chat works differently. Files sent in a one-on-one or group chat are stored in the sender’s OneDrive, in a folder called Microsoft Teams Chat Files (Microsoft Learn), and shared only with the people in that chat (Microsoft Support). So the signed agreement a coworker dropped into a chat lives in her OneDrive and leaves on the same clock she does. Asked what happens to external sharing links and Teams file references once an unlicensed OneDrive is deleted, Microsoft’s answer is that the content “can no longer be accessed” (Microsoft Learn).

The habit to teach is simple. Chat is for quick questions and rough drafts. If a file matters, post it in a channel.

Sync is useful, with limits

The sync app is what makes SharePoint feel like the old shared drive, because a synced library shows up in File Explorer. Before you point every laptop at every library, know the limits.

  • Item count. Microsoft recommends syncing no more than 300,000 items in total across everything a person syncs, and performance can suffer past that even if they aren’t syncing every item. Shortcuts to shared folders count toward the same soft limit (SharePoint limits). Microsoft began rolling out support for up to 1,000,000 items in April 2026, but it’s a preview of the OneDrive sync app for Windows that needs at least 16 GB of RAM and a solid-state drive. Other devices stay at 300,000.
  • Path length. A file’s full path, folders plus file name, can’t exceed 400 characters, which deeply nested folders from an old server can hit.
  • Download less. Files On-Demand lets people see and open everything without downloading all of it to their laptop.

There’s a security side, too. Microsoft’s own guidance is blunt: if a departed employee synced files to a personal computer, “there’s no way for you to wipe those files”. You can limit sync to company-managed computers. For PCs joined to an on-premises Active Directory domain, it’s a SharePoint admin setting. For PCs joined only to Microsoft Entra ID, the cloud directory, Microsoft points to Conditional Access (rules that decide which sign-ins and devices get in), which as of October 2026 requires Entra ID P1 or Microsoft 365 Business Premium.

A simple rule for where each kind of file belongs

The OneDrive vs SharePoint decision comes down to one question. If the business would need the file after the person who made it leaves, it belongs in SharePoint or a Teams channel. If only its author needs it, OneDrive is fine. When a draft becomes the real thing, it moves.

Kind of file Where it belongs Why
Drafts, notes, personal working files OneDrive Only the author needs them, for now
Client, patient, or matter files A SharePoint library for that work The business owns the record
Templates, forms, and policies A company-wide SharePoint site Everyone needs the current version
HR, payroll, and owner-only files A SharePoint site with a short member list Access by role, not by who shared what
Project files The project’s Teams channel Already SharePoint underneath
Files sent in a chat A channel or library, if they matter Chat files live in the sender’s OneDrive

Two habits keep this from turning messy. First, set access at the site or library level with groups, not file by file. Microsoft recommends no more than 5,000 uniquely permissioned items per list or library, and once a library or folder holds more than 100,000 items, you can’t give it permissions separate from its parent (SharePoint limits). Second, check your default sharing link while you’re in there. I covered that setting in five Microsoft 365 settings worth checking in an older tenant.

Cleaning up what’s already in personal OneDrives is mostly a moving job. Microsoft lists limits of 100 GB and 30,000 files for moving or copying between sites, so plan a large cleanup in batches, starting with whatever people share most.

Moving off an old file server

If your Central Florida office is retiring a Windows Server 2016 file server before support ends on January 12, 2027, this decision is the heart of the project. I laid out a full timeline in my Windows Server 2016 plan for Orlando offices. For the files themselves:

  • Map shares to sites. Give each department or function its own site or library. Don’t pour the whole S: drive into one person’s OneDrive, and don’t build one giant library that blows past the sync guidance.
  • Clean up first. Archive or delete what nobody has opened in years, and shorten folder paths that run long.
  • Rebuild permissions with groups that match how your office works today, not how the old server’s permissions piled up.

Notes for medical, legal, and accounting offices

Everything above applies to any small or midsize business. Regulated offices have a few extra reasons to care. This isn’t legal advice; your attorney decides what these rules require of your office.

Medical and dental practices

Patient charts belong in your EHR or practice management system, not in either of these. But protected health information still lands in Microsoft 365: scanned referrals, exported reports, insurance correspondence, and your HIPAA paperwork. Under the HIPAA Security Rule, required documentation, including your security policies and procedures, must be kept for six years from when it was created or last in effect, whichever is later, and be available to the people responsible for those procedures (45 CFR 164.316). Policies sitting in a former office manager’s OneDrive are at risk on both counts. Here’s how we work with medical and dental practices.

Law firms

Keep client files in a firm-owned library organized by client or matter, so access follows the matter instead of whoever created the file. Library-level permissions in SharePoint are how you keep one attorney out of a matter without locking down everything else. What you want to avoid is the only copy of a client’s file in an associate’s OneDrive when that associate takes a job across town. If you use a dedicated document management system, that system is the record. See how we support law firms.

CPA and accounting firms

The IRS notes that professional tax preparers count as financial institutions under the FTC Safeguards Rule (IRS Publication 4557). That rule requires access controls that limit each user to the customer information they need for their job (16 CFR 314.4). That’s far easier to show with client folders in a firm library, with access granted by group, than with returns scattered across preparers’ OneDrives. It matters most after busy season, when seasonal staff move on. More on how we work with CPA and accounting firms.

The honest tradeoffs

SharePoint is still the right home for company files. It has costs and friction worth knowing before you start.

  • It takes planning. Someone has to decide the sites, the libraries, and who belongs in each. A careless SharePoint becomes the old S: drive with a web address.
  • Shared storage is smaller than it looks. A 30-person office on a Business plan gets 1 TB of OneDrive per person, but its shared SharePoint pool is about 1.3 TB (1 TB plus 10 GB for each of 30 licenses). Recycle bin contents count against that pool, and an organization that stays over its limit can be put into read-only mode (SharePoint limits). More storage is available, at extra cost.
  • Sync takes managing. Syncing every library to every laptop is how offices find the 300,000-item ceiling, and restricting sync on PCs joined only to Entra ID needs Entra ID P1 or Business Premium.
  • It isn’t a backup. Moving files to SharePoint takes them off the offboarding clock. It doesn’t give you a second copy outside Microsoft 365 to restore from when something goes wrong inside it. I explained why that matters in what really happens when you lose data in Microsoft 365.

Where I have a stake in this

Harmony MSP sells managed Microsoft 365 administration, and most of this post (SharePoint setup, offboarding, backup) is work we get paid for. I benefit if you decide it’s worth paying someone to do. Weigh that.

There’s a less flattering reason this matters to us. When we handle offboarding for a client, deleting the account is often our step, and that starts the clock on anything still in that person’s OneDrive. A file that only lived there becomes a loss on our watch, whether or not anyone told us it existed. I’d much rather your company files never lived there at all.

Whoever runs your IT, ask them two questions: what is our deleted-user OneDrive retention set to, and who gets access to a departing employee’s files? If they can’t answer quickly, that tells you something.

Frequently asked questions

Is it better to use SharePoint or OneDrive?

Use both, for different jobs. OneDrive is for files that belong to one person, like drafts and personal working files. SharePoint, which is also where Teams channels keep their files, is for anything the business would need after that person leaves.

Why would you save a file to SharePoint instead of to OneDrive?

Because the business owns a SharePoint file, not an individual. Access follows site or team membership, and when someone leaves, the file stays put; Microsoft’s own instructions for deleting a user say you don’t need to move their SharePoint files. A file in OneDrive goes on a deletion clock once its owner’s account is deleted.

What are the disadvantages of SharePoint?

It takes planning, and a careless setup becomes a messy shared drive with a web address. Its storage is a shared pool, 1 TB plus 10 GB per license on Business plans as of October 2026, far smaller than everyone’s combined OneDrive space. Very large libraries also run into Microsoft’s 300,000-item sync guidance, and like OneDrive, it isn’t a backup.

Where to start

If you don’t know how many company files are sitting in personal OneDrives right now, or what your retention setting is, find out before your next resignation letter, not after. We’re happy to look at it with you: where your files live, what happens when someone leaves, and what a sensible SharePoint layout looks like for an office your size. No pressure, no obligation.

We’re based in Lake Mary and provide managed cybersecurity in Orlando and IT support in Orlando for offices across Central Florida. Call us at (407) 720-6540 when it suits you.

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