
SOC 2 Type 1 vs Type 2: Which Should You Choose?
Both Type 1 and Type 2 SOC 2 reports require an audit by a qualified service auditor or CPA firm. So, which one is right for your organization? The choice often comes down to your timelines and current readiness.
If you’re looking to demonstrate compliance quickly—especially if an enterprise client requires it to close a deal—a Type 1 report is a great short-term solution. It evaluates your current controls at a specific point in time, which is ideal if your company is early-stage or has recently implemented new security systems. It shows that your controls are in place, even if they haven’t been operating long enough to undergo a Type 2 assessment.
On the other hand, a Type 2 report takes longer (typically 3-12 months) as it evaluates whether your controls are not only designed well but also function effectively over a period of time. This provides deeper assurance to customers, especially for those seeking long-term partnerships with companies that have a mature security posture.
PRO TIP: If you’re short on time and resources, a Type 1 report can quickly show clients you’re secure and help close the deal.
SOC 2 Audit Scope and Requirements
The Trust Services Criteria (TSC) are the foundational pillars of SOC 2 compliance, guiding how service organizations protect and manage customer data. There are five Trust Services Criteria categories: Security, Availability, Processing Integrity, Confidentiality, and Privacy. Each of these criteria focuses on different aspects of data protection. Security internal controls ensures that systems are safeguarded against unauthorized access, Availability guarantees that systems are accessible when needed, and Processing Integrity ensures that data is processed accurately and reliably. Confidentiality safeguards sensitive information, while Privacy focuses on protecting personal data. Together, these criteria help organizations implement and maintain effective controls to ensure data security and trustworthiness.
Industries and Service Provider That Typically Choose SOC 2 Type 1
Organizations that need to quickly demonstrate security compliance—such as startups or those in the middle of implementing new systems—should consider a Type 1 report. It’s perfect for service provider looking to secure deals quickly, without the need for long-term control evaluations.
Startups/Tech Startups – Companies in early growth stages that need to quickly demonstrate security controls to win deals or investment.
SaaS Providers – New SaaS companies needing to show they have basic security controls in place, especially when approaching enterprise customers.
Fintech Startups – Young fintech firms looking to secure partnerships with financial institutions or demonstrate security compliance to regulators.
Healthtech Startups – Early-stage healthcare tech companies seeking to comply with HIPAA or other regulations while proving their initial security measures (Sensitive data).
E-commerce Startups – Online retailers who need to quickly show security compliance to payment processors or suppliers.
Industries and Service Provider That Typically Choose SOC 2 Type 2
Organizations handling sensitive customer data and seeking long-term assurance should aim for a Type 2 report. It offers proof that your internal controls work effectively over time and signals to enterprise clients that your security practices are reliable and mature.
Financial Services – Banks, investment firms, and credit unions need long-term assurance that their security controls are effective over time.
Healthcare Providers/Healthtech Companies – Organizations handling sensitive health data, such as telemedicine platforms or hospitals, need to prove ongoing security compliance (Sensitive data).
Large SaaS Companies – Mature SaaS providers looking to secure long-term enterprise deals by proving sustained security practices over time.
E-commerce Platforms – Large e-commerce platforms or those dealing with sensitive customer payment data need Type 2 to ensure security effectiveness for payment processors and customers.
Cloud Service Providers – Companies offering cloud storage, processing, or hosting solutions to enterprise customers, where security must be reliable and maintained continuously.
FAQ
What is the difference between SOC 2 Type 1 and Type 2?
SOC 2 Type 1 evaluates the design of your controls at a specific moment, while SOC 2 Type 2 assesses both the design and effectiveness of those controls over a set period (typically 3-12 months).
Who needs to be SOC 2 Type 1 compliant?
Organizations that need to quickly demonstrate security compliance—such as startups or those in the middle of implementing new systems—should consider a Type 1 report. It’s perfect for companies looking to secure deals quickly, without the need for long-term control evaluations.
Who needs to be SOC 2 Type 2 compliant?
Organizations handling sensitive customer data and seeking long-term assurance should aim for a Type 2 report. It offers proof that your internal controls work effectively over time and signals to enterprise clients that your security practices are reliable and mature. A SOC 2 Type 2 report examines how well a service organization’s system and controls perform over a period of time (typically 3-12 months).