1. Login to the Office 365 Admin Center and click Users, then Active users on the left Quick Launch Toolbar.
2. On the Active users menu, click the + Add a user button.
3. Complete the new user details. Ensure the domain drop-down box has the correct domain available and selected. If the domain name is not configured and available for selection, see the guide Add a Custom Domain Name.
4. Depending on your password policy, you may either automatically generate the new user's password temporarily and then let the user set their own password once they log in (see first screenshot) or you can set it yourself (see second screenshot).
Please note that Microsoft's password complexity requirements are as follows:
Minimum 8 characters
At least 1 lowercase letter
At least 1 uppercase letter
At least 1 number or symbol
Cannot include any part of your username (email address)
5. Assign license(s) as applicable for the new user and click Add.
6. The account/mailbox is now created at this point and a quick summary of the new user's details will be displayed. If you would like to send these new credentials to the user (recommended if you are allowing them to set their own password), make sure the "Send password in email" checkbox is checked and enter in an email address to send the credentials to, then click "Send email and close". Otherwise, uncheck the "Send password in email" checkbox and click Close.