SOC 2 Type 1 vs Type 2: What's the Difference?
We explain the difference between SOC 2 Type 1 and Type 2 to help you make the right choice for your business.
You’ve decided it’s time to pursue SOC 2. The next thing you need to consider is which type of SOC 2 report you need: Type 1 or Type 2?
They may sound interchangeable, but in practice they’ll require different budgets, take different lengths of time, and tell a buyer different things. In this guide, we’ll break down what separates SOC 2 Type 1 and Type 2, and which one you should pursue first.
What Is SOC 2 Type 1?
A SOC 2 Type 1 report evaluates whether your security controls are designed correctly at a single point in time. The auditor looks at your controls on one date and confirms they're in place and built to meet the relevant Trust Services Criteria.
It's the fastest route from zero to a SOC 2 report because there's no observation window. The auditor assesses your controls as they stand on the examination date. Essentially, a Type 1 shows your controls exist, not how they work over time.
If you prioritize it, you can be audit-ready in one to two weeks, the fastest we've taken a company there was eight or nine days.
However, Type 1 is often a stepping stone to Type 2 and many buyers will expect your business to begin working towards a Type 2 report as soon as Type 1 is in place.
What Is SOC 2 Type 2?
A SOC 2 Type 2 report evaluates whether your controls operated effectively over a period of time.
Instead of a single date (like Type 1), the auditor reviews an observation window that's usually 3 to 12 months. Throughout that window, you have to run your controls, collect evidence, enforce access reviews, keep policies current, fix vulnerabilities.
A SOC 2 Type 2 report carries more weight with buyers because it shows evidence of a functioning security program working over time, which is what a procurement team is trying to verify before they trust you with their data.
Do SOC 2 Type 1 and Type 2 Have Different Requirements?
No, Type 1 and Type 2 have the same requirements. This is the most common misconception about the two reports.
Both are assessed against the same Trust Services Criteria, and both use the same set of controls. Security is required for every SOC 2 report, whereas Availability, Confidentiality, Processing Integrity, and Privacy are optional and added based on what your buyers need. None of that changes between Type 1 and Type 2.
The key difference is the audit method. Type 1 tests whether controls and designed and in place on a single date, while Type 2 examines how those controls operate over the observation window. The controls and criteria are the same; only the test is different.
How Long Does SOC 2 Type 1 vs Type 2 Take?
Soc 2 Type 1 can take a couple of weeks to a couple of months depending on your starting point. Type 2 will take 4-6 months for a first timer due to the observation window.
The work that goes into getting audit ready is similar for both. You still scope the audit, write policies, configure your systems, and close gaps against the criteria.
For Type 1, you can be audited directly after you have all the controls and policies in place. For Type 2, audit readiness means you can start the observation window which will take at least 90-days. Generally, you're looking at four to six months for a first-time Type 2 report.
If you're pursuing Type 2, timing matters as you can't rush the observation window. If SOC 2 is on the horizon for your business, the best time to start is now.
SOC 2 Type 1 vs Type 2: Which is Right for Your Organization?
First up, you’ll need to pass an audit from a qualified auditor or CPA for both Type 1 and Type 2. The major differences between the two are the time they take and the budget needed.
The choice largely depends on the stage you’re at, the urgency, customer demands. If you need SOC 2 quickly to close a deal, Type 1 is the quickest way to get a report in front of your prospect. But Type 1 is generally seen as a bridge to Type 2.
Here’s when each type of report is the right choice:
When a Type 1 Report Makes Sense
For most businesses, the ultimate goal should be to achieve SOC 2 Type 2. But there are some scenarios where Type 1 is the right choice:
- To unblock sales: If you’re an early stage startup and deals are stalling because you don’t have SOC 2, then a Type 1 audit to validate the design of controls is the quickest way to get a report and show prospects that you take security seriously.
- To prove the foundations: If you’ve just completed an architectural overall and want to quickly get an auditor to validate you have controls in place within your new design.
Type 1 is often seen as a short-term fix as your work towards Type 2. Some prospects may even reject Type 1 reports and even if they accept it, the delivery of a Type 1 report is often followed by, "Great. When does your Type 2 observation period start?"
If you can, going straight for Type 2 is often the best play.
When to Go Directly to Type 2
When a buyer asks about your security controls, the question is really focused on a SOC 2 Type 2 audit. They want to know that your controls work in real-world scenarios and that they can trust your organization to look after their customer data.
A Type 2 report should be the goal for most organizations. It demonstrates a strong security posture, and because a Type 2 audit monitors the operating effectiveness of your controls over a period of months, it’s far more comprehensive than Type 1.
Even if you need SOC 2 quickly, you could get a Type 2 audit report that covers a three month period to show your controls in action vs. a Type 1 that just shows them in place.
The Cost Differences Between SOC 2 Type 1 and Type 2
The work you need to do leading up to SOC 2 Type 1 and Type 2 is largely the same. But audit costs for Type 2 will generally be higher due to the observation window.
For small and mid-sized companies, a Type 1 audit will cost roughly $5-20k with Type 2 running from $10-20k. For larger enterprises, costs can be $30-100k+.
The audit fee is only a part of the the overall costs though. If you're thinking about SOC 2 you should also consider:
- Readiness assessment ($10-15k)
- Compliance automation platforms and tooling ($10-20k/year)
- Penetration testing ($10–$15k)
- Ongoing monitoring ($5-$20k)
Turn Compliance into a Growth Engine
Many fast-growing businesses see SOC 2 compliance as a tax they have to pay to deal with enterprise customers. In reality, it’s a business opportunity. SOC 2 certification opens doors to new customers and can be a competitive advantage for the companies that take it seriously.
For any growing business, every hour matters. If you want to avoid SOC 2 becoming an internal time-suck and pulling your team away from their day-to-day tasks, a partner like Workstreet can enable you to maintain your growth trajectory without compromising your compliance efforts.
Workstreet helps fast-growing companies achieve compliance without slowing down. Our expert SOC 2 implementation services get you audit-ready quickly. From Type I to Type II, we'll guide you through every step of the process with proven methodologies. Talk to our team here.
Frequently Asked Questions
Is SOC 2 Type 2 better than Type 1?
For most buyers, SOC 2 Type 2 is preferred to Type 1 because a Type 2 report proves your controls worked over time, while a Type 1 only shows they were designed and in place on a certain date.
What's the difference between SOC 1 and SOC 2?
SOC 1 covers controls relevant to your customers' financial reporting. SOC 2 covers security and the other Trust Services Criteria. Both come in Type 1 and Type 2 versions, but most SaaS companies need SOC 2.
Can a Type 1 and Type 2 cover different scope?
They can, but they usually shouldn't. Keeping the same scope across both makes your Type 2 a clean continuation of your Type 1 and avoids confusing buyers who compare the two reports.
How do you get a SOC 2 Type 2 faster?
You can't shorten the observation window below ~90 days, so speed comes from the prep work. You can generally get ready for SOC 2 faster if you scope tightly, use a compliance automation platform to collect evidence, and start the observation window as early as possible.
