ERROR:

When creating new users in Office 365 Admin Portal you only have the option to create them with .onmicrosoft.com email address.

Changing how new users are created is one possible solution.

Creating New User Accounts  -  Step-by-Step instructions:

These steps will create a new user account in the local Active Directory which will automatically create a synchronized user account in Office 365.

1. Open Active Directory Users and Computers on a Windows 2008 R2 or later server. Ensure that Advanced Features is enabled (View > Advanced Features).
2. Start the creation a new Active Directory user account as you normally would. Do not complete any Exchange server properties if you are requested to do so.
3. Make sure the user’s email address on the General tab of the AD properties is correct.
4. Create the users login name on the Account tab as follows:
   1. User Logon Name: The first part of their email address.
   2. The Domain name drop-down: The second part of their email address (not the AD domain name if they are different).

      Note:  This is probably the main difference from creating accounts in the past. Verify the account uses "yourcompany.com" (EG Test_User01@yourcompany.com) and NOT the default yourcompany.yourcompany.com option.

   3. User Logon Name (Pre Windows 2000): DOMAIN as provided and use the first part of the email address (i.e. first_last etc). If first part of email is too long enter as much as you can and ensure it is unique within the domain).
   4. Complete the rest of the user properties as needed (EG Groups, Organization Info, etc).
   5. Click OK and close the account creation dialog.
5. Within 30 minutes this object will sync to Office 365 / Windows Azure Active Directory.
   1. You can force the synchronization by logging into the AD Connect server and starting PowerShell.
   2. Type “Import-Module ADSync” in PowerShell.
   3. Type “Start-ADSyncSyncCycle -PolicyType Delta” in PowerShell – AD Connect will replicate now rather than waiting up to 30 minutes.
   4. Check that the Synchronization process was successful in the PowerShell window and/or in Event Viewer – if you have entered user values that are not unique then the sync will fail to replicate and you will need to fix those values on-premises and replicate again.
6. License the user in Office 365 by logging into the Admin Portal and granting a license to this user. The mailbox will be created automatically shortly after user is assigned the license.
7. Verify the account is working by searching in the Office 365 Admin Portal for the user account and verify only one user is present. If the account was created in Office 365 first or there are some other errors then there may be duplicate accounts.