Turn on External sharing in Office 365

External Sharing must be enabled or configured in two places before people can start sharing sites, documents, lists or libraries.

The first place is under settings in the SharePoint admin center:

Under External sharing, choose the level of access you’d like to enable, and whether or not you want to have anonymous access:

Now select your site collection, and click on Sharing.

And now enable external user access to your site:

You see the warning that Sharing links is disabled in Tenant Settings because of the settings I chose in step 1 – if you want to be able to share a link to a file without requiring someone to authenticate, you need to go back and change your global sharing settings to allow for that functionality.

Now that external sharing is enabled, you can share sites, files and folders with individual users – if you need to be able to explicitly share a list or library, it requires some extra steps, which are detailed here.