Most small businesses never plan a software license audit. It happens by accident: a renewal notice arrives for more seats than anyone remembers buying, a departing designer takes the Adobe login with them, or a vendor sends a letter asking the company to confirm its licensing. Doing the audit yourself, on your own schedule, is cheaper and calmer. This software license audit checklist walks through the steps, from inventory to renewals, with the Microsoft 365 and Adobe details that trip up most offices.

Step 1: inventory what is installed and subscribed

Start with two lists. The first is what runs in your business: installed programs on every computer, plus the cloud services staff sign in to. Device management tools and many security consoles can export installed software; for cloud apps, sign-in logs, expense reports and a short staff survey find the rest. The second list is what you pay for: every subscription, license key and contract, with its renewal date and the person who owns it.

Include the easily forgotten items: plugins and fonts, add-ons for accounting and design software, server software such as Windows Server and its client access licenses, and apps paid on personal cards and claimed as expenses.

Step 2: match installations to license entitlements

License entitlements are what your agreements allow you to use: how many users or devices, which editions and under what terms. Match each installation and each user to an entitlement, and the gaps show up on both sides. Software in use without a matching license is a compliance risk; licenses paid for and unused are waste. Keep the proof alongside: invoices, order confirmations and agreement numbers. Software license compliance rests on documents, and a purchase you cannot show may as well not exist when someone asks.

Step 3: Microsoft 365 license cleanup

Microsoft 365 is where most small offices find money. A Microsoft 365 license cleanup usually turns up:

  • Unused Microsoft 365 licenses still assigned to people who left months ago. Convert the mailbox to a shared mailbox if you need to keep it, then remove the license.
  • Shared addresses with their own license, such as info@ or orders@, which as shared mailboxes generally do not need one within Microsoft's size limits.
  • Plans that do not match the job: staff on premium plans who only use email, or people missing security features the business needs.
  • Overlapping tools for file sharing, video meetings or e-signatures that the existing plan already includes.

Timing matters as much as the count. On Microsoft's annual-term subscriptions, seats can generally be reduced only within a short window after purchase or renewal, currently seven days, after which the count is committed for the rest of the term. Plan reductions around the renewal date, and check the terms of your own subscription in the Microsoft 365 admin documentation. The Business plans are also capped at 300 users; above that, Enterprise plans apply.

Step 4: Adobe and other per-seat software

Creative software is the second common leak. Personal Adobe subscriptions paid on a company card leave with the employee, along with fonts and sometimes files. Moving designers to business licenses managed from Adobe's Admin Console keeps seats in the company's name and lets you reassign one in minutes. The same principle applies to other per-seat tools: accounts under the company domain, more than one administrator, and seats reassigned rather than bought again when people change roles.

Step 5: finish the software license audit with a register

Put everything into one register: product, vendor, license type (subscription, perpetual or volume agreement), quantity, assigned users or devices, cost, renewal date, cancellation notice period and internal owner. A spreadsheet is enough for most small offices; updating it at every hire, departure and purchase matters more than the tool. Set reminders well before each renewal, so you can reduce, switch or cancel on your own terms instead of renewing by default. Keeping such a register up to date is part of our software license management service. This is also the simplest way to reduce IT costs without taking away anything people actually use.

If a software vendor audit letter arrives

Vendors, including Microsoft and Adobe, can ask business customers to verify their licensing. The request may be framed as a friendly review or as a formal audit under your agreement's audit clause, and the difference matters. When a software vendor audit letter arrives:

  • Do not ignore it, and do not rush to send data either.
  • Read the audit clause in your agreement to see what the vendor may ask for and within what timeframe.
  • Name one person to handle all communication.
  • Run your own reconciliation first, so you know your position before sharing anything.
  • For formal audits or significant exposure, get legal advice. This article is general information, not legal advice.

Frequently asked questions: software license audit

How often should a small business audit its software licenses?

Once a year as a full review, plus a quick check whenever someone joins or leaves. Aligning the annual review with your largest renewal gives it a natural deadline.

Do we need dedicated software asset management tools?

Not at small scale. A reliable inventory export and a well-kept register cover most needs. Dedicated software asset management platforms earn their cost as device counts and vendor agreements grow.

Can an unused license be moved to another employee?

Usually, for subscriptions assigned per user: remove the license from one person and assign it to another. Perpetual and device-based licenses have their own transfer rules, so check the agreement before moving them.

Prefer to hand this over? Our software asset management and licensing service covers discovery, reconciliation, Microsoft 365 and Adobe reviews and a license register with renewal dates for businesses in Los Angeles. SAM services work best alongside day-to-day IT care, which our managed IT services provide. Contact us to start with a review of what you pay for today.