What Should Be in a Small Business Password Policy?

A small business password policy does not need to be complicated. It needs to clearly explain how employees should create, store, share, protect, and update passwords.

Why a password policy matters

Without a policy, employees may make their own decisions about passwords. Some may reuse passwords, store them in browsers, send them by text, or share them through email.

A password policy creates clear expectations and supports better security habits.

What the policy should include

A small business password policy should explain the basics in plain language.

• Use unique passwords for business systems.
• Do not reuse personal passwords for work accounts.
• Do not share passwords through email or text when avoidable.
• Use approved password storage methods.
• Use Multi-Factor Authentication for important accounts.
• Report suspicious sign-in prompts or password requests.
• Update passwords when there is a known concern.

Address shared passwords

The policy should explain whether shared passwords are allowed and how they should be handled.

• Which shared passwords exist
• Why they are needed
• Who can access them
• Where they are stored
• When they should be changed
• What happens during offboarding

Include Multi-Factor Authentication

Passwords alone are not enough for important accounts. The policy should explain when Multi-Factor Authentication is required.

MFA should be required for administrator accounts, finance systems, email, cloud storage, payroll, and other sensitive business systems.

Include offboarding steps

The password policy should connect to the offboarding process. When someone leaves, the business should remove individual access and change shared passwords when needed.

1. Disable or remove the user's accounts.
2. Remove access to shared password vaults.
3. Change shared passwords the user knew.
4. Review administrator access.
5. Document what was completed.

J3 Systems Group LLC helps small businesses and nonprofits create practical password policies, organize account access, improve Multi-Factor Authentication, and document offboarding steps.