Every business we onboard in Lawrenceville, Suwanee, or anywhere in Gwinnett County, we run a Microsoft 365 license audit in the first 30 days. And almost every single time we find money sitting on the table. Sometimes it is a few licenses for former employees. Sometimes it is enterprise plans on people who do not need them. Sometimes it is add-ons nobody has touched in 18 months. The bill keeps getting paid because nobody has looked at it in a year.
Microsoft 365 has gotten complicated. There is Business Basic, Business Standard, Business Premium, E1, E3, E5, F1, F3, plus a stack of add-ons like Teams Phone, Defender for Business, Intune, Visio, Project, and Copilot. It is easy for a small business to end up paying for the wrong plan, paying for ex-employees, or paying for features nobody uses.
This post walks you through how to audit your own Microsoft 365 tenant. You can do most of this yourself in about 30 minutes. If you would rather just have us do it as part of managed IT services, that is an option too, but I want everyone to at least know what to look for.
Step 1: Pull Your License Inventory
Sign into the Microsoft 365 admin center at admin.microsoft.com. You will need to be a Global Admin or License Admin to do this.
Go to Billing > Licenses. You will see every license type your tenant pays for, how many you have bought, and how many are assigned to users.
Write down (or screenshot) two numbers for each license type:
- Total purchased
- Assigned to users
The gap between those numbers is your first easy win. Any license you are paying for but have not assigned to a real human is pure waste. Could be a leftover from a project that ended, a buffer somebody bought "just in case," or a renewal that didn't get adjusted when someone left.
We typically find 2-5 unassigned licenses per small business tenant. Multiply that by the cost of a Business Standard or Business Premium seat each month, and the math gets uncomfortable fast.
Step 2: Find Your Ghost Licenses
Now go to Users > Active users. Sort by "Last sign-in" (you may need to add this column).
Any user who hasn't signed in for 60+ days is a ghost. Reasons this happens:
- Someone left the company and the offboarding checklist missed the license removal
- An employee changed roles and their old account never got cleaned up
- A shared mailbox got accidentally licensed (more on this below)
- A contractor finished their engagement and the account got disabled but not unlicensed
- A board member or advisor who barely uses email is still on a full license
For each ghost, decide:
- Confirmed terminated employee: Convert their mailbox to a shared mailbox (free, up to 50GB) and remove the license. Their email keeps working for anyone else who needs to access it. This is the single biggest mistake we see.
- Still need their stuff but they're gone: Same as above. Shared mailboxes are free and preserve everything.
- Still working there but rarely uses email: Consider downgrading to Business Basic or even an F1 frontline license if all they need is occasional access.
For a 20-person business in Duluth or Lawrenceville, ghost license cleanup alone usually trims a meaningful chunk off the monthly bill.
Step 3: Are You on the Right Plan?
This is where it gets interesting. Here is a quick guide to what each Microsoft 365 plan is built for.
Business Basic: Web and mobile apps only. Good for non-desktop users like floor staff, drivers, occasional users. No desktop Office apps.
Business Standard: Full desktop Office apps, email, OneDrive, Teams, SharePoint. The right plan for most office workers at a small business.
Business Premium: Everything in Standard, plus Defender for Business (anti-malware/EDR), Intune (device management), Azure AD Premium P1, and conditional access. This is where most security-conscious small businesses should be in 2026.
E3 and E5: Enterprise plans. Often overkill for a small business. If you are paying for E3 or E5 and you have fewer than 300 employees, you should seriously look at whether Business Premium covers your needs at a meaningful fraction of the cost. The biggest reason businesses end up on E3/E5 is that a Microsoft partner recommended it years ago when their needs were different.
We have moved multiple clients from E3 down to Business Premium and the savings are real. For a 25-person business, the difference adds up to a noticeable line item every month.
There are legitimate reasons to be on E3 or E5 (Power BI Pro included, advanced compliance, higher mailbox limits, certain regulated industries). But you should be able to name the reason. If nobody can, you are probably overspending.
Step 4: Audit Your Add-Ons
Add-ons are where the silent budget bleed happens. Check Billing > Your products for any of these:
Teams Phone: Great if you use Microsoft Teams as your phone system. Wasteful if you have a separate VoIP provider or only need it for a handful of users. We see businesses pay for Teams Phone for the whole company when only 5 people need it.
Visio Plan 2: Often assigned to people who used it once two years ago. Most users can be moved to Visio Plan 1 or removed entirely.
Project Plan 3 or 5: Same story as Visio. Often over-licensed.
Power BI Pro: If you are on E5, this is already included. Do not pay for it separately.
Microsoft 365 Copilot: This one is relatively new and a lot of businesses are throwing it at every employee. If only a few people are actually getting daily value from it, peel back the licenses. You can always add them later.
Defender plans, Intune add-ons, Azure AD P2: Often included in plans you are already paying for. Make sure you are not double-buying.
Want Us to Run a Free M365 License Audit?
We do this as part of every new client onboarding for Gwinnett County businesses, and we're happy to do it as a standalone for businesses that just want a second opinion on their bill.
Book a Discovery CallStep 5: Check Your Storage
OneDrive, SharePoint, and Exchange mailboxes all have storage tied to your license plan. Sometimes businesses buy additional storage when they do not need to. Go to Reports > Usage and look at the actual storage being used. If you are well under your included limit, cancel any storage add-ons.
Step 6: Document Your Decisions and Lock It In
After you have made all your changes, write down:
- Who got downgraded and why
- Who got removed and what happened to their data
- Which add-ons you cut
- A note for the next renewal cycle
The single biggest reason this stuff piles back up is that nobody owns the license inventory. If your business has 25+ employees, somebody (HR, the office manager, your IT provider) needs to own the offboarding checklist that includes license removal.
A Few Common Questions
A Note on What an IT Provider Actually Adds to M365
Microsoft will happily sell you a license. They will not configure it for your business. They will not enforce MFA on every user, set up conditional access, layer in email security beyond the basics, monitor for compromised accounts, run training on phishing, back up your Microsoft 365 data (Microsoft does not do versioned backups of your tenant for you), or audit your licenses every quarter.
That is what we do as part of managed IT services, and most of our clients are on Business Premium because that is where the security tooling lives. Our managed cybersecurity service layers email security, conditional access, and EDR monitoring on top. If you have an internal IT person and just want help with the heavier pieces, our co-managed IT service covers exactly that gap.
When we quote M365 as part of an engagement, it is not the same as Microsoft retail because we bundle the security, management, and ongoing oversight that makes the licensing safe and useful. If you are comparing IT providers in the Gwinnett area, that is a fair question to ask: what is included with the license, and what is the actual security posture on top of it? Our Microsoft 365 migration guide goes deeper on the deployment side.
The Bottom Line
Microsoft 365 license sprawl is real, and it is easy to ignore until you start adding up the line items. A 30-minute audit almost always pays for itself. If you would rather hand this off, we do M365 license audits for our managed IT clients across Atlanta and Gwinnett County as part of the quarterly business review, and we are happy to do a one-time audit for any small business that just wants a second set of eyes on their bill.
Either way, do the audit. Your CPA will thank you.
