"Show me everything we have on salaries." Typed into Microsoft 365 Copilot by a curious new employee, that question gets an answer. Not because Copilot broke any rules, but because it followed them exactly.
AI assistants are arriving in small offices quickly, mostly because they are already sitting inside the software people use every day. Microsoft 365 Copilot, Google's Gemini in Workspace, and a dozen smaller tools all promise the same thing: ask a question in plain language and get an answer drawn from your own files and email. While that promise is genuinely useful, it comes with a catch that very few businesses think about before switching it on.
The tool sees what the user can see
Microsoft is clear that Copilot only surfaces content a user already has permission to access. That sounds reassuring, and in a well-run tenant it is. However, in most small businesses, the permissions were never designed. They accumulated.
A folder was shared with "everyone in the company" to make one file easier to find. A former manager's OneDrive was shared with the whole team when they left. A SharePoint site created for a project three years ago still lets every employee open it, and it still contains the payroll export somebody saved there.
Before AI, none of that mattered much. Finding the payroll file meant knowing it existed and knowing where to look. Nobody browses old project sites for fun. AI removes that obscurity entirely. Ask the right question and the file comes back, summarised, in a second. The permissions did not change. What changed is how easy they became to exercise.
What gets exposed
In the small businesses we look at, the usual suspects are the same: payroll and salary information, HR files, client records shared too widely, financial statements, and anything a departed employee owned that was handed to the whole team rather than one person. Unfortunately, it is often material with privacy obligations attached, such as client files at a law firm or patient information at a clinic.
The clean-up to do first
Find what is shared with everyone. In Microsoft 365, SharePoint sites and files shared with the entire organisation, or through "anyone with the link", are the first place to look. Most of them should be restricted to the team that actually needs them.
Fix the sensitive locations specifically. Payroll, HR, finance and client records each get a named group of people who can open them, and nobody else. Start here even if you do nothing else, because these are the files that cause real harm when they surface.
Deal with leavers properly. A departed employee's files should transfer to one named person, not get shared with the whole company. We covered the order to do it in in the offboarding checklist.
Label what is sensitive. Microsoft 365 can mark documents as confidential and restrict what happens to them, including whether AI tools can use them. It takes some setup, but it turns "please don't open the HR folder" into a rule the system enforces.
Write a short AI policy. Which tools are approved, what information can be pasted into them, and who to ask. A paragraph is enough for a small business. The point is that staff know where the line is before they cross it with a client's file in a free chatbot.
Our verdict
We are not against AI tools. Used well, they save small teams real hours, and that is a large part of the automation work we do. With that being said, switching them on before fixing permissions is the wrong order. The tool will faithfully show every employee everything they were technically allowed to see, and most businesses have never checked what that includes.
Do the permissions clean-up first. It usually takes a few days, and it is worth doing whether or not you ever turn on an AI assistant. Then turn the tool on, knowing exactly what it can reach.
Reviewing who can see what is part of how we support Microsoft 365, and the insurance-readiness review is a sensible place to find out how much of your tenant is shared more widely than you intended.