Ask five people in a small business where the latest version of a client file is, and you'll often get five answers: “in my OneDrive”, “in the Teams chat”, “on SharePoint somewhere”, “I emailed it to you”, “check my desktop”. It isn't anyone's fault. OneDrive, SharePoint and Teams all store files, they all sync to your computer, and Microsoft never really explains which one to use when.
Here's the simple version, followed by the details that actually matter for a growing business.
OneDrive vs Teams vs SharePoint: the quick answer
- —OneDrive is your personal storage: drafts and files only you need.
- —SharePoint is the business's shared storage: client, project and company files that must stay when people leave.
- —Teams is for chat, calls and meetings. It doesn't keep files of its own: files shared in a channel are saved in SharePoint, and files shared in a chat are saved in the sender's OneDrive.
The one-line rule
If it belongs to you, save it in OneDrive. If it belongs to the business, save it in SharePoint. Use Teams to talk about it.
Ask yourself one question before you save: “If I left tomorrow, would someone else need this file?” If the answer is yes, it doesn't belong in your OneDrive.
OneDrive: your personal work drawer
OneDrive is your storage. It's private to you unless you share something, and it's the right place for:
- —Drafts you aren't ready to share yet
- —Your own notes, templates and working files
- —Personal admin, like your own timesheets or training certificates
The catch: OneDrive is tied to the person, not the business. When someone leaves and their account is deleted, Microsoft keeps their OneDrive for a limited time (30 days by default) before it's gone for good. If client files were living there, you have a month to notice and rescue them.
SharePoint: the business's filing cabinet
SharePoint is where shared work lives. Files belong to the business, so they stay put when people come and go, and access is managed by role rather than by whoever happened to share a link. It's the right place for:
- —Client and project folders that more than one person works on
- —Policies, procedures, templates and anything “official”
- —Records you're required to keep, like contracts, compliance documents and finance files
- —Departmental areas, such as HR or Finance, with tighter access
Your business also gets pooled SharePoint storage: 1 TB plus 10 GB for every licence you pay for, on top of each person's own OneDrive.
Teams: where the conversation happens
Here's the part that surprises most people: Teams doesn't really store files itself. Where a file ends up depends on where you share it:
- —Shared in a team channel? It's saved in that team's SharePoint site. Good: it belongs to the business.
- —Shared in a one-to-one or group chat? It's saved in the sender's OneDrive, in a folder called “Microsoft Teams Chat Files”. Not so good: it belongs to that person, and leaves when they do.
- —Private and shared channels get their own separate SharePoint sites, with their own membership.
So the habit to build is: post work files in channels, not chats. Better still, save the file in SharePoint first and share a link in the chat. Everyone edits the same file, and there's only ever one version.
OneDrive vs Teams: what's the difference?
People often compare OneDrive and Teams because both show files, but they do different jobs. OneDrive is a place to store files. Teams is a place to work together, and it borrows storage from OneDrive and SharePoint behind the scenes. A file you drop into a Teams chat is really sitting in your OneDrive, so if you leave the business, it can go with you. A file posted in a Teams channel is really in SharePoint, so it stays with the business.
What this looks like in a real firm
- —Accounting firm: each client has a folder (or site) in SharePoint for tax returns, payroll and correspondence. A team member's half-finished workings can sit in their OneDrive until they're ready for review, then move to the client folder.
- —Law firm: every matter has its own SharePoint workspace with access limited to the people on the case. Discussion happens in the matter's Teams channel, so files shared there land in the right place automatically.
- —Wealth management firm: household documents live in SharePoint with tight permissions and a clear audit trail. Advisers keep meeting prep in OneDrive and file the final versions.
- —Construction or manufacturing: drawings, specs and safety documents live in SharePoint, so the site team and the office always open the current revision rather than a copy someone emailed.
If you work in one of these sectors, I've written more about how I set this up for accounting firms, law firms, wealth managers, construction companies and manufacturers and distributors.
Four mistakes I see all the time
- —Business files in personal OneDrives. It works until someone leaves, goes on long leave, or is off sick when a client needs something urgently.
- —Everything shared in chats. Important documents end up scattered across several people's OneDrives, and nobody can find the final version.
- —One giant “Shared Documents” library. Moving from a server to SharePoint by copying the old folder tree across, ten levels deep, recreates the same mess in the cloud. Search struggles and permissions get tangled. (I wrote about why SharePoint search stops working when this happens.)
- —Syncing whole SharePoint sites to every laptop. Instead, open the folder you use most in SharePoint and choose “Add shortcut to My files”. It appears in OneDrive and File Explorer, without copying the whole library to everyone's computer.
Why this matters even more with Copilot
Microsoft Copilot can only use files you already have access to, so it's only as good as the place your files live. If the real versions are scattered across personal OneDrives and chats, Copilot finds old copies and gives confident but wrong answers. If they're in well-organised SharePoint sites with sensible permissions, it finds the right file and doesn't show anyone what they shouldn't see.
How to fix it in your business
- —Agree the rule with your team: personal work in OneDrive, business work in SharePoint, conversation in Teams.
- —Set up SharePoint around how you work, with a site per department or client group and libraries that match your real processes, rather than one big dumping ground.
- —Connect Teams to those sites, so files shared in channels land in the right library automatically.
- —Move business files out of personal OneDrives, starting with anyone who has a lot of client work in theirs.
- —Add it to your leaver checklist: before an account is removed, check their OneDrive for anything the business needs.
If you're setting up Microsoft 365 for the first time, my free Microsoft 365 setup checklist walks through this in order. If your files are already spread across all three and you'd like it sorted properly, my Microsoft 365 setup service covers exactly this.
