SOC 2 Type 1 vs Type 2: What's the Difference?

If your company sells to enterprise customers, they’ll want to do their due diligence before signing a contract. Often, this means sharing insights into your security posture via an AICPA SOC 2 report.

There are two types of SOC 2 report: SOC 2 Type 1 and SOC 2 Type 2. Both require the same criteria to be met, however there are differences in how they analyse your posture as well as the time and cost to pass assessments.

• A SOC 2 Type 1 is a snapshot that evaluates your cybersecurity controls at a single point in time.
• A SOC 2 Type 2 highlights how your controls perform over a period of time.

In this guide, we'll cover SOC 2 Type 1 and Type 2, the audit process, the costs, and how to decide which report fits your business needs right now.

What is SOC 2 Type 1?

I like to think of SOC 2 Type 1 report as a photograph as a SOC 2 Type 1 audit will assess your controls at a single point in time, usually fresh after implementation. The goal of a Type 1 report is to analyze the design of your security posture and to determine if you’ve put all of the needed controls in place to protect your customer’s sensitive data.

Type 1 audits are generally quicker to complete and less expensive.

What is SOC 2 Type 2?

Whereas Type 1 is a snapshot of a service organization’s security controls, a SOC 2 Type 2 report assesses how your controls perform over time (often 3-12 months). So Type 1 looks at what you’ve implemented, Type 2 looks at how effective they are.

A SOC 2 type 1 audit can take 12 months to complete. As such, it’s more expensive and time-consuming than Type 1.

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. Choosing which is right for your business often depends on the stage you’re at, the urgency, customer demands.

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:

1. 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.
2. 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 SOC 2 Audit Process: A Step-by-Step Timeline

Getting a SOC 2 report is a major project that can take anywhere from a few months (for a fast Type 1) to over a year (for your first Type 2). Here’s what the process generally looks like:

1. Step 1: Readiness Assessment and Gap Analysis: This is where you, your auditor, and/or your compliance partner (like Workstreet) map your current environment against the SOC 2 requirements based on your chosen Trust Services Criteria (TSCs). You'll identify every gap, from missing policies to unconfigured logging to assess your SOC 2 readiness.
2. Step 2: Implementation and Remediation: This is where the heavy lift starts. You'll need to write policies, document procedures, implement new tools like Mobile Device Management, vulnerability scanners, or software for evidence collection.
3. Step 3: The Observation Period (Type 2 Only): Once your controls are implemented, the clock starts. This is your chosen observation window (e.g., 3, 6, or 12 months) where you must operate your controls and collect evidence (logs, screenshots, tickets) proving they're working.
4. Step 4: The Formal Audit and Report: The auditor steps in (usually virtually) and performs their fieldwork for your attestation. For Type 1 they review your documentation and system design as of that date. This might take a week or two. For Type 2 they request the evidence collected during the observation period to prove the effectiveness of controls. This is a much more intensive process that can take several weeks.

Where SOC 2 can become a headache is the amount of time it takes for engineering teams. Prepping for SOC 2 audits can pull key engineers away from building features to chase down screenshots.

That’s why many fast-growing companies choose to work with a third-party compliance partner. At Workstreet, we’ve helped hundreds of companies become SOC 2 compliant without slowing down their internal teams.

We recently helped Granola achieve SOC 2 in three months. Working with Workstreet also gave Granola the confidence they wouldn’t miss any critical requirements. "It only takes one thing to fail the certification," said Clementine Markman, Founding Ops Lead at Granola. "There's a lot of pressure from the whole company because you can't screw this up. Having Workstreet took that pressure off."

We don't just give you a platform to help you navigate SOC 2, we give you a plan and the experts to execute it. From Type I to Type II, we'll guide you through every step of the process helping you to get audit-ready faster, without distracting your team from its real job.

SOC 2 Timelines and Cost Considerations

Implementation timelines for both SOC 2 Type 1 and Type 2 are similar as you require the same controls for both reports. Where Type 1 becomes cheaper (and faster) is the audit. Because the audit only checks your controls are in place with no on-going monitoring, your CPA firm audit fees will be less.

SOC 2 Type 1 will generally take one to three months to complete from start to finish. Whereas Type 2 may take 3-12 months depending on the length of your observation period.

When you’re making the decision between Type 1 and Type 2, also consider the long-term costs. If you’ll need SOC 2 Type 2 shortly after achieving Type 1, it may be more cost-effective to go straight to Type 2.

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. From SOC 2 and other compliance frameworks to security questionnaire automation and penetration testing, we deliver full-stack solutions that transform security and compliance from operational anchors into growth accelerators.

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