SOC 2 is an auditing standard that verifies how your organization protects customer data. It comes in two forms:
You might think of SOC 2 Type 1 as a snapshot of a design and SOC 2 Type 2 as proof of consistent execution. Choosing between these audits, and how to prepare for each of them, is where a lot of organizations get stuck.
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SOC 2 (System and Organization Controls 2) is an auditing standard developed by the American Institute of Certified Public Accountants (AICPA) to assess how service organizations manage customer data. It’s built around five Trust Services Criteria (TSC):
Unlike compliance frameworks such as HIPAA or PCI-DSS, SOC 2 is not a legal mandate. It’s more of a market signal, or proof that your organization takes data security seriously enough to have an independent auditor verify it. For SaaS companies, technology vendors, and B2B services providers, it has become the de facto table-stakes requirement for landing enterprise contracts.
A SOC 2 Type 1 audit is a point-in-time cybersecurity assessment. It answers the question: Are your security controls designed appropriately as of today?
Your auditor will evaluate whether the controls you claim to have in place are actually designed in a way that would meet the relevant Trust Services Criteria. The assessment happens on a specific date; there’s no observation period, no ongoing evidence collection, and no evaluation of whether controls worked consistently over time. For these reasons, a SOC 2 Type 1 audit is generally the less time-intensive and slightly lower cost option.
To prepare for a SOC 2 Type 1 audit internally, your organization needs to have documented, implemented, and at minimum briefly tested the controls in scope.
Common internal preparation follows these steps:
Document the services being audited, the infrastructure, and the data in play. Scope decisions directly impact the cost and complexity of the audit.
Written information security policies, access control procedures, incident response plans, and vendor management frameworks must be in place and formal.
Controls must exist, and not just in a policy document. MFA, encryption, logging, change management, and access reviews need to be operationally active.
Before the formal audit, a readiness review will help you identify gaps between where you are and where you need to be, so you can avoid costly surprises during the actual audit.
SOC 2 Type 2 is an audit that measures cybersecurity effectiveness over time. It answers a deeper question: Did your security controls operate effectively over a defined period?
Your auditor will review evidence like logs, tickets, screenshots, access reviews, and configuration records spanning the entire audit window, which is typically three to 12 months. This audit goes beyond the system design and looks at consistency, repeatability, and proof that your controls function as advertised, day in and day out. Because of the prolonged process, a SOC 2 Type 2 audit is typically the lengthier and more expensive option.
The preparation for a SOC 2 Type 2 audit is more sustained and evidence-heavy than a SOC 2 Type 1 audit. Your team needs to operate controls consistently and capture evidence throughout the audit window.
Here are four of the most important requirements:
Access reviews, vulnerability scans, security training completion, and change management logs must be collected and retained on a defined schedule.
If your audit window is six months, controls must be operating and documented for all six months. No gaps. Auditors look for exceptions and lapses.
Regular internal check-ins against the audit criteria will help you catch drift before your auditor does.
At the end of the audit window, your team (or your readiness partner) assembles evidence packages organized by control for auditor review.
|
Category |
SOC 2 Type 1 |
SOC 2 Type 2 |
|
What It Evaluates |
Design of controls at a single point in time |
Operating effectiveness of controls over a period |
|
Timeframe |
A specific date (snapshot) |
Observation period (usually 3-12 months) |
|
Audit Rigor |
Moderate — focuses on documentation and design |
High — requires sustained evidence over time |
|
Typical Timeline |
2-4 months from readiness start |
9-18 months, including observation period |
|
Cost |
Lower — shorter engagement and less evidence |
Higher — more auditor hours and evidence |
|
Market Credibility |
Good — demonstrates commitment and baseline posture |
Stronger — the gold standard for enterprise buyers |
|
Best For |
Early-stage orgs, initial compliance signal, quick wins |
Enterprise sales, regulated industries, mature security programs |
|
Repeat Cadence |
Often once, then transition to Type 2 |
Annually to maintain currency |
|
Internal Team Burden |
Moderate — primarily documentation |
Sustained — ongoing evidence and control operation |
The right choice depends on where your organization is in its maturity curve, what your customers are demanding, and how quickly you need something in hand.
Choose Type 1 when… you need a compliance signal fast.
Choose Type 2 when… enterprise customers demand operational proof.
How mature is your cybersecurity posture? Find out with this free self-assessment >>
More enterprise procurement teams now specifically require SOC 2 Type 2. If you’re closing mid-market and enterprise deals, plan your roadmap around Type 2 from the start, even if you begin with Type 1. Starting with Type 2 as an interim step and immediately entering the observation period is often the most efficient path to a Type 2 report without losing time.
A typical SOC 2 journey might look something like this:
|
Readiness Assessment |
Type 1 Audit |
Observation Period |
Type 2 Audit |
Report Issued |
|
Weeks 1-4 |
Months 2-4 |
Months 4-10 |
Months 10-14 |
Months 15-18 |
We hear the same myths from IT leaders and founders all the time. Here are the most important ones to clear up before you start the SOC 2 process.
Myth: “A Type 1 audit is good enough for enterprise customers long-term.”
Reality
Type 1 can get you in the door, but increasingly, enterprise security teams and procurement processes require a Type 2 audit before signing contracts, especially for platforms handling sensitive data. Don’t build your go-to-market strategy around a Type 1 as your permanent posture.
Myth: “Once we get SOC 2 Type 2, we’re done.”
Reality
SOC 2 Type 2 reports have a shelf life. Most enterprise customers expect annual renewal. Your controls need to be sustained and your audit cadence maintained. SOC 2 is a program, not a one-time project.
Myth: “We just need to buy compliance software and we’re ready to audit.”
Reality
Compliance management platforms are useful tools, but they don’t implement your controls, write your policies, or train your team. The technology layer alone won’t get you audit-ready. What moves the needle is building and operating the controls the platform is supposed to track.
Myth: “Our IT team can handle SOC 2 readiness as a side project.”
Reality
This is one of the most costly mistakes we see. When SOC 2 prep falls on already-stretched IT staff without dedicated security expertise and/or bandwidth, organizations either stall out, miss the audit window, or enter the audit unprepared and receive a qualified report.
The readiness phase — what happens before the auditor shows up — is where most organizations either succeed or struggle. Here are some tips for building momentum without creating chaos.
A structured cybersecurity gap assessment can give you a clear map of where you stand against the Trust Services Criteria before you commit to an audit timeline. It identifies your highest-risk gaps, prioritizes remediation, and prevents the expensive surprise of discovering critical deficiencies mid-audit.
Scope is one of the most powerful levers in SOC 2. You don’t have to include every system your company touches. Work with your readiness partner to define the smallest defensible scope that satisfies your customers’ requirements, then expand it in future audits as your program matures.
Your policies need to describe what you actually do, not aspirational behavior. One of the most common audit exceptions comes from organizations that documented excellent policies but couldn’t demonstrate consistent practices.
Someone needs to own this. Not as a third priority behind their other responsibilities, but as a real accountability. For many mid-sized technology companies, this is where a virtual CISO (vCISO) delivers incredible value in the form of strategic ownership, compliance expertise, and program leadership without a full-time executive hire.
For Type 2, the observation period is everything. Train your team to collect and store evidence in real time, from access review records to change management tickets, security training completions, and vulnerability scan results. Building this habit before the observation window starts means you won’t be scrambling to reconstruct evidence after the fact.
Yes, in many cases it makes sense to skip Type 1 entirely. If your controls are already reasonably mature, jumping straight to a Type 2 observation period saves time and delivers a more credible report to enterprise buyers.
The decision depends on your current security posture, your timeline, and your customer requirements. A gap assessment can help you make this call with real data.
Most organizations completing their first SOC 2 Type 2 audit should budget 12-18 months from readiness and gap assessment phase (4–8 weeks), control implementation and maturation (variable), a 3-12 month observation window, and the auditor’s fieldwork and reporting period. Organizations with more mature programs can compress this timeline significantly.
No. Security is mandatory for all SOC 2 audits. The other four (Availability, Processing Integrity, Confidentiality, and Privacy) are optional and should be added based on what your customers ask about and what’s relevant to your services. Adding criteria increases audit scope and cost, so scope decisions should be strategic.
Exceptions in a SOC 2 report are noted deviations from control objectives. They don’t automatically disqualify you from doing business with enterprise customers, but it matters how you respond. Documenting corrective actions, showing the issue is isolated, and demonstrating remediation are critical. The worst outcome is having exceptions that your customers discover before you address them.
Costs for both audits vary significantly based on scope, organization size, and auditing firm. Generally, SOC 2 Type 1 audits run between $15,000-$50,000 for the audit itself. Type 2 audits typically range from $30,000-$100,000+, not including readiness preparation work.
The readiness phase that includes implementing controls, writing policies, and building evidence collection processes is often a comparable investment to the audit itself, and is where working with an experienced partner can deliver the highest return.
Whether you’re determining which audit type fits your stage, trying to recover a stalled compliance program, or ready to run a full Type 2 engagement, let’s talk. Our team works with growth-stage companies nationwide to turn SOC 2 from a sales obstacle into a competitive advantage.
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