If you run a small business, keeping your team's passwords secure is one of the smartest investments you can make. Between email accounts, project management tools, payment processors, and social media logins, your business relies on dozens of credentials every day.
A password manager gives you a single, encrypted place to store and share those credentials safely. With the right setup, your team gets quick access to the logins they need while sensitive accounts stay protected.
This guide walks you through 7 practical steps to set up a password management system that works for your business. You'll learn how to get the most out of LastPass, establish smart policies, and build a workflow that keeps your team secure without slowing anyone down.
Quick guide: How to manage passwords for your small business in 7 steps
- Assess your current password setup: Review how your team stores and shares passwords today.
- Set up LastPass Business for your team: Create your account and invite team members to join.
- Organize secure password sharing: Build shared folders with appropriate permissions for each team or role.
- Establish company-wide password policies: Define rules for password strength, reuse, and regular updates.
- Enable multifactor authentication: Add MFA to all business accounts for an extra layer of protection.
- Train your team on password manager basics: Show everyone how to save, autofill, and share passwords safely.
- Create an offboarding process: Build a workflow to revoke access quickly when employees leave.
How to set up password management for your small business
1. Assess your current password management setup
Before you change anything, take stock of how passwords flow through your business today. You might be surprised by what you find.
Start by identifying all the accounts your team uses. This includes shared logins like your company's social media accounts, cloud storage platforms, and any software subscriptions. Make a list, and note who has access to each.
Next, look at how passwords are being stored. Are team members keeping them in spreadsheets? Sending them over Slack or email? Writing them on sticky notes? These habits are common, but they create real security gaps.
Finally, spot the risks. Shared passwords that never get updated, former employees who might still have access, and weak passwords used across multiple accounts are all red flags worth addressing.
2. Set up LastPass Business for your team
Start by creating your admin account at LastPass.com and choosing a plan that fits your team size. From there, you can invite team members via email. Each person will create their own master password, which is the only password they'll need to remember going forward.
Next, install the browser extension on company devices. This is what enables autofill and password saving as your team works. LastPass also has desktop and mobile apps, so team members can access credentials from anywhere.
Before you start adding passwords, take a few minutes to explore the admin dashboard. This is where you'll manage users, create shared folders, and set security policies. Familiarizing yourself with these controls now will save time later.
3. Organize secure password sharing
With LastPass set up, it's time to organize how your team shares credentials.
Create shared folders based on how your business operates. You might have one folder for marketing team logins, another for accounting software, and a separate one for company-wide tools. Each folder can have its own permissions, so you control who can view passwords and who can make edits.
Assign permissions thoughtfully. Limiting who can see sensitive accounts, like your banking portal or admin tools, reduces risk if an account is ever compromised.
When you add new passwords to shared folders, use the built-in password generator to create strong, unique credentials.
4. Establish company-wide password policies
Password policies set the ground rules for how your team creates and manages credentials. Here's what to include.
Set minimum requirements for password strength. A good baseline is at least 12 characters with a mix of uppercase letters, lowercase letters, numbers, and symbols. Better yet, let your password manager's generator handle this automatically.
Require unique passwords for every account. If one password is ever exposed in a data breach, unique credentials ensure your other accounts stay protected.
Change passwords when there's a reason to, not on a fixed schedule. Security experts now recommend updating credentials after a suspected breach or when an employee with access leaves, rather than forcing quarterly rotations. Your password manager's Security Dashboard can flag weak, reused, or compromised passwords automatically, so you know when action is needed.
5. Enable multifactor authentication on all accounts
A strong password is a great first step, but adding a second verification method makes accounts much harder to crack.
MFA, or multifactor authentication, requires something beyond your password to log in. This could be a code from an authenticator app, a fingerprint scan, or a hardware key like YubiKey.
Start with your most sensitive accounts: email, banking, cloud storage, and any admin portals. Then roll out MFA across all business tools that support it.
For small teams, authenticator apps like LastPass Authenticator or Google Authenticator are a practical choice. They work with most platforms and are easy for team members to set up on their phones. Hardware keys like YubiKey are another option, offering phishing-resistant authentication for your most sensitive accounts.
6. Train your team on password manager basics
A quick training session helps your team get comfortable with the new system and builds good habits from the start.
Cover the essentials: how to save new passwords, how to use autofill, and how to access shared folders. Show them how the password generator works and why it matters.
Address common questions upfront. What happens if someone forgets their master password? How do they access passwords on their phone? Who do they contact if something looks wrong?
Make training materials available for reference later. A short video walkthrough or a one-page cheat sheet can save time when new hires join or when someone needs a refresher.
7. Create an offboarding process to revoke access quickly
When an employee leaves, you need to cut their access fast. Without a clear process, former team members might still have the keys to your most sensitive accounts.
With LastPass, offboarding is straightforward. When you remove a user from your Admin Console, they immediately lose access to all shared folders and credentials. There's no need to manually change every password they could see.
For accounts where the departing employee had direct admin access, like your company's social media or financial tools, you may still want to update those passwords as an extra precaution.
Why are strong passwords important for small businesses?
Strong passwords are your first line of defense for every account your business relies on. A weak or reused password makes it easier for someone to gain unauthorized access, which can lead to lost data, financial headaches, and time spent cleaning up the mess.
When each account has a unique, complex password, a breach at one service doesn't put your other accounts at risk.
Password managers make strong passwords practical. The built-in password generator creates complex credentials for every account, and autofill means your team never has to type them out manually.
What's the difference between a personal and business password manager?
Personal password managers store your logins in a private vault. Business password managers do that too, but they add a layer of admin control and visibility that teams need.
With a business plan, you can set security policies across your organization. For example, you can require a minimum password length, enforce multifactor authentication, or restrict access from certain locations. LastPass Business offers 120 configurable policies, so you can tailor the rules to fit how your team works.
Reporting is another key difference. Business password managers show you adoption rates, password health scores, and audit logs that track who accessed what and when. This visibility helps you spot weak points and demonstrate compliance if you're ever audited. Personal plans don't include these admin-level insights.
How LastPass helps you manage passwords for your small business
LastPass gives your team a secure home for every password, credit card, and sensitive note your business relies on. The intuitive folder system makes organizing and sharing credentials simple, even for team members who aren't tech-savvy.
With LastPass Business, you get 120 security policies to customize how your team uses passwords. Role-based administration lets you assign permissions at the team or individual level, and Super Admin privileges give you emergency access when you need it. The Security Dashboard shows you weak, reused, and compromised passwords at a glance, so you can fix issues before they become problems.
Dark web monitoring alerts you if any of your team's credentials appear in a data breach. And when employees leave, removing their access takes just a few clicks. LastPass also integrates with major identity tools like Microsoft Entra, Okta, and Google, so you can connect it to your existing systems.
LastPass Business includes 24/7 live support across phone, email, and chat. If you ever run into trouble, help is always available.
Start your free LastPass trial and see how easy password management can be for your small business.
