SharePoint, OneDrive or Teams: where should business files go?

The rule we would give a new starter

Think of Teams as a front door rather than a third place to keep files. Behind it there are only two storage systems: OneDrive, which belongs to one person, and SharePoint, which belongs to a site and its members. The real decision is whether a file is somebody's or something the business needs.

Microsoft's service description draws the line in the same place. OneDrive is described as personal storage for an individual's work files, and the page says that storing departmental or organisation-level data there is not supported. SharePoint is named as the better fit for managing files across a team or organisation. Our own judgement goes one step further: if you would be upset to lose a file when one particular employee leaves, it should not live only in that employee's OneDrive.

As an illustration, picture a fictional 30-person architecture practice. Draft notes, a half-written proposal and a personal reading list suit OneDrive. The current fee schedule, signed contracts and project drawings do not. Those belong in a site the practice owns, with more than one owner.

What Teams actually does with your files

This is where most confusion starts, because the Files tab looks the same everywhere. Where the file really sits depends on the kind of conversation. At the time of writing (November 2026), Microsoft's documentation says the following:

• Standard channels: files go into a folder for that channel in the team's SharePoint site. All standard channels in a team share one site, with a separate folder each. Microsoft calls this a Teams-connected site, and team owners and members are automatically site owners and members.
• Private channels: each private channel gets its own SharePoint site, and only members of the private channel can access it. Microsoft says that site cannot be shared separately, and its permissions follow the channel.
• Shared channels: these also get their own site, which only members of the shared channel can access. Sharing with people outside the organisation who are not channel members is not supported.
• Chats (one-to-one and group): files you send are stored in the Microsoft Teams Chat Files folder in the sender's OneDrive and shared with the people in that conversation.
• Meeting recordings: for scheduled and meet-now meetings the recording is saved to the organiser's OneDrive, in a Recordings folder, even if the organiser did not attend. For one-to-one and group calls it goes to the OneDrive of whoever pressed Record. Channel meeting recordings go to a Recordings folder in the channel's SharePoint site.

Why ownership matters more than location

The practical difference between the two systems appears the day someone leaves. A SharePoint library belongs to the site, so it carries on. A OneDrive belongs to a person, and the leaver process is built around winding it up. Chat files and most recordings follow the sender's or organiser's OneDrive, so they inherit that fate. For recordings Microsoft says so directly; for chat files it is our inference from where they are stored, as Microsoft's file storage page does not describe what happens when the sender leaves.

Here is what Microsoft documents for a deleted user's OneDrive. The clock starts only when the account is deleted from Microsoft Entra ID. Blocking sign-in or removing the licence does not start it. After deletion the default retention period is 30 days, which an administrator can change. During that window the user's manager gets access automatically, provided access delegation is enabled and a manager is set. If there is no manager, a secondary owner configured in the SharePoint admin center is used instead. If neither exists, nobody is told and nobody gets access. A reminder email goes out seven days before the retention period ends.

After that the OneDrive sits in a site recycle bin for 93 days, where only a SharePoint administrator can restore it, using PowerShell. Retention policies and labels override all of this, so content can be kept longer or removed sooner than the defaults suggest. One more catch: Microsoft says OneDrives without a valid licence are archived on their 93rd unlicensed day, and that after 12 months of unpaid archive the data might be deleted regardless of retention settings. Keeping a leaver's account unlicensed as a cheap parking space is therefore not a plan.

How to decide for a given file or folder

Work through these in order and stop at the first one that fits. They are our recommended pattern, built on the behaviour described above.

• Only you need it, or it is a draft nobody else should see yet: OneDrive. Move it later if it becomes part of a project.
• A team works on it regularly: the SharePoint site behind the team's standard channel. Everyone who joins the team gets access, and nobody has to remember to share anything.
• Only a subset of the team should see it: a private channel works, but be aware its site permissions are managed through the channel and are shown read-only in SharePoint. For genuinely sensitive material such as HR or finance records, a dedicated SharePoint site gives you more direct control, and Microsoft advises keeping confidential information in a site with external sharing turned off.
• You collaborate with people outside the business: a shared channel keeps outside participants inside one site, but only while they are channel members. External sharing is on by default across SharePoint and OneDrive, and a site cannot be more permissive than the organisation-wide setting. Decide deliberately where client-facing files live rather than letting links accumulate in personal OneDrives.
• It arrived as a chat attachment or a recording and people will need it later: move it into the team's library. Chat files stay in the sender's OneDrive and are visible only to the chat's participants.
• Departmental, organisational or system-backup data: never a personal OneDrive. Microsoft says this use is not supported, and that includes assigning a per-user licence to a department or other non-human account to host it.

Limits that can change the answer

For most small businesses the limits are generous enough that storage allowance is not what decides this, but two details are worth a glance.

On Microsoft 365 Business Basic, Standard and Premium, Microsoft lists OneDrive at 1 TB per user. SharePoint storage is pooled across the whole tenant: 1 TB plus 10 GB per licence purchased, with a maximum of 25 TB per site. Microsoft's own worked example is 100 users giving 2 TB. The tenant pool figure does not include each user's OneDrive. Frontline plans differ sharply: Microsoft 365 F3 is listed at 2 GB of OneDrive per user and 1 TB of SharePoint in total, with nothing added per licence.

Recordings are the sneaky consumer. Microsoft puts a one-hour recording at around 400 MB, and recordings count towards OneDrive or SharePoint quota, so a busy organiser's OneDrive fills up faster than people expect. Microsoft also says that if the SharePoint pool stays over its limit the tenant can be put into read-only mode, so check your plan's figures against what you are using before moving a large amount of content into SharePoint.

Check what you have today without changing anything

This pass is read-only until step three, and even there you only look. You need the SharePoint Administrator role for the first steps. The aim is to find where the business's real master copies are living and whether a leaver would be handled properly.

1. Sign in to the SharePoint admin center and open Active sites. The top right shows the storage used across all sites against your subscription total. Compare the list of sites with how the business actually works. Any department or client area with no site of its own is probably living in someone's OneDrive.
2. Ask three team leads one question each: if you left tomorrow, where would your colleagues find the current master copy of your most important file? Write down the answers. This conversation will tell you more than any report.
3. Open the leaver settings. In the SharePoint admin center go to More features, select Open under User profiles, then Setup My Sites, and look at My Site Cleanup. Check that Enable access delegation is selected and whether a secondary owner is filled in. Only press OK if you deliberately change something. Be aware that enabling delegation gives a manager access to everything in a departing person's OneDrive, personal material included, which is a policy decision as well as a technical one.
4. Spot-check a handful of staff profiles in Microsoft Entra ID and confirm each has a manager recorded. Microsoft's process relies on that field, and without it, and without a secondary owner, nobody is notified when a OneDrive is due for deletion.
5. Ask whoever looks after Microsoft Purview whether any retention policies or labels cover SharePoint and OneDrive. They take precedence over the standard deletion process, so you need to know about them before you promise anyone a restore window.

Moving a shared file set out of a personal OneDrive

Do this with one small, low-stakes folder first. A move changes where files live and who can reach them, so it is worth a quick trial. If you are moving a lot, bear in mind that Microsoft's limits for moving between sites are 100 GB total and 30,000 files at a time, so split large sets.

1. Decide the destination and who should have access afterwards. A standard channel's library gives access to everyone in the team. If only some of them should see the files, use a private channel or a dedicated site instead. Make sure the destination has at least two owners.
2. Open the folder in OneDrive on the web, select it and choose Move to. Pick the destination library. Microsoft's departing-employee guidance describes a Keep sharing with the same people option on this screen. Tick it only if existing collaborators, including outside ones, still need their links to work, because it also carries over people you may prefer to drop. We have not tested these labels in a live tenant, so confirm what your version shows.
3. Larger folders can take a while to move. Wait until the destination shows the files before doing anything else with the source.
4. Ask a colleague who was never an owner of the folder to open and edit a file from the new location. Also open a file through a link that was shared before the move, if you kept sharing. If both work, move on to the next folder.
5. If something is wrong, the rollback is the same action in reverse: use Move to again to send the folder back to the original OneDrive. Accidentally deleted files can be recovered from the relevant recycle bin. Leave the old location alone until you are happy.