For most small businesses I visit, either platform would work. That's the honest starting point, and it's something most comparison guides won't say because it makes for a boring article. The question isn't which is better. It's which fits your situation better.
Here's how I actually help clients think through it.
The compatibility question comes first, not the feature list
If your business runs complex Excel files with macros, relies on Access databases, or regularly exchanges formatted Word documents with clients, stick with Microsoft 365. Google Sheets is capable for most purposes, but complex Excel compatibility is genuinely imperfect. You will spend time fixing formatting issues when files move between platforms, and that time adds up.
If your clients and partners are heavily Microsoft-based (law firms, accountancies, large corporates) the path of least friction is Microsoft. The alternative isn't impossible, just annoying.
If your team uses personal Gmail accounts and already finds Google Docs intuitive, the Workspace learning curve is low. For a business without dedicated IT support, that matters. Training time is a real cost even when nobody invoices it separately.
Where each platform genuinely wins
Google Workspace was built for real-time collaboration from the ground up. Multiple people editing the same document at once, changes visible instantly, works cleanly. The sharing model is faster and more flexible for businesses that share a lot of documents externally.
Microsoft 365 is stronger for structured processes. SharePoint, Teams, and Power Automate integrate tightly. If you have formal approval workflows, document management requirements, or any automation ambitions, the Microsoft stack holds together better. Google's equivalent tools exist but feel bolted on by comparison.
On email: Outlook handles high-volume, complex email management better. Gmail is cleaner for people who prefer a minimal interface. Neither is wrong.
What it actually costs
Microsoft 365 Business Basic is around £5 per user per month for web and mobile apps only. To get full desktop applications (Word, Excel, Outlook installed on your computer) you need Microsoft 365 Business Standard at around £10.30 per user per month.
Google Workspace Business Starter is around £5.20 per user per month and is primarily web-based. Business Standard, which increases storage and adds better meeting features, is around £10.40 per user per month.
At comparable tiers they're similar in price. The cost difference matters when you look at what's included at each tier, particularly around cloud storage limits and video conferencing capabilities.
Three simple decision rules
If you have existing Microsoft software, Access databases, or complex Excel workflows: Microsoft 365. The compatibility risk of switching is real.
If you're starting fresh with no legacy constraints and your team is small: think about your working style. Heavy structured processes and formal documents lean towards Microsoft. Fast collaboration and external sharing lean towards Google.
If your team already knows and prefers one platform: that. Training friction for a small business is worth taking seriously. A platform people actually use is better than a technically superior one they find confusing.