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SOC 2 Type 1 and SOC 2 Type 2: What’s the Difference?

Compliance

There are no laws that require your business to get a System and Organization Control 2 (SOC 2) report. However, it’s a must-have for B2B companies in the modern day. That’s because it has become a de facto measure of economic and cybersecurity health. In fact, many companies expect SOC 2 from their service providers.

The problem is there are two types of SOC 2 reports, Type 1 and Type 2. Choosing the wrong one could either cause you to lose out on lucrative contracts or cost you a lot more time and money. So, what’s the difference? And which one do you need?

 Intelligent Technical Solutions (ITS) has helped many businesses achieve SOC 2 certification. In this article, we’ll look at the key distinctions between both types of reports and guide you toward finding the right one for your business.

Security professionals analyzing SOC 2 Type 1 vs Type 2 compliance requirements in their office

What’s the Difference Between SOC 2 Type 1 and SOC 2 Type 2? 

The main difference between SOC 2 Type 1 and SOC 2 Type 2 reports is the timeframe they cover: 

What is SOC 2 Type 1? 

A SOC 2 Type 1 report assesses your company's systems and controls at a specific point in time. It takes a snapshot of how well those systems and controls are designed and implemented at that moment. It's like taking a picture of a well-organized room to show how tidy it is at that particular moment. 

What is SOC 2 Type 2? 

This report covers a period of time, usually a minimum of six months. Like type 1, It examines the design and implementation of your systems and controls. However, it also evaluates how effective those controls are over time. It's like watching a time-lapse video of a room to see if it stays organized and tidy consistently over several months. 

In essence, Type 1 shows how things are at one point, while Type 2 gives a more comprehensive view by showing how things operate over time. 

Comparing SOC 2 Type 1 and SOC 2 Type 2 

Business partners engaged in a discussion about SOC 2 Type 1 versus Type 2 certifications at a desk

Take a look below for a quick comparison of both SOC 2 types: 

 

SOC 2 Type 1 

SOC 2 Type 2 

Time Needed to Achieve 

3-6 months 

6-12 months 

Cost 

Starts from $15,000 to $60,000 

Typically ranges between $15,000 to $60,000 

What is It? 

A short-term solution to demonstrate compliance. It takes a snapshot of security controls at a single point in time. 

A long-term solution to demonstrate compliance. It shows ongoing effectiveness of security controls over time (typically 6 months or more). Includes detailed descriptions of the auditor tests. 

Advantages 

Quicker to obtain compared to Type 2. Allows you to fulfill immediate contractual obligations or provide initial assurance. 

Provides higher levels of assurance. Often required for long-term partnerships and regulatory compliance. 

Disadvantages 

Lacks depth and does not provide enough assurance. You may eventually need a type 2 to satisfy client needs. 

Requires more time and resources to obtain compared to Type 1. May reveal issues or gaps in controls. 

Renewal 

N/A 

Every 12 months 

Which One Does Your Business Need? 

Choosing between a SOC 2 Type 1 or Type 2 report depends on your organization's specific circumstances and the requirements you need to meet. Here, we’ll dive into when you might want to choose one over the other. 

When Do You Need a SOC 2 Type 1? 

A SOC 2 Type 1 report is needed when you want to demonstrate that your organization has established and implemented effective systems and controls at a specific point in time. This can be useful for providing assurance at a particular moment, which can be crucial for building trust or meeting contractual requirements. 

Your business might get better value from a SOC 2 Type 1 if: 

You’re a Startup/New Business 

Suppose you're a new company or just starting to establish your systems and controls. A Type 1 report can be beneficial to demonstrate your commitment to security and compliance at a particular moment. 

You Have Contractual Obligations 

Some clients or partners may require a SOC 2 Type 1 report to ensure that you have implemented necessary security and compliance measures before engaging in business with you. 

You Want to Improve Marketing and Trust Building

Obtaining a Type 1 report can also be a strategic move to build trust with potential clients or investors by showcasing your commitment to data security and privacy. 

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When Do You Need a SOC 2 Type 2? 

Alternatively, you might require a SOC 2 Type 2 report to offer more thorough assurance over an extended timeframe (usually six months or longer). This is crucial if clients or stakeholders seek evidence that your systems and controls remain consistently effective. A Type 2 report can showcase the continuous reliability and performance of your controls. That’s essential for long-term partnerships, regulatory adherence, or sustaining client trust. 

Your business might be better served by a SOC 2 Type 2 if: 

You are an Established Business 

Once your systems and controls are established and have been operating for some time, a Type 2 report provides a more comprehensive view of their effectiveness over an extended period. 

You Want Long-Term Contracts or Partnerships 

Clients or partners involved in long-term engagements may require a Type 2 report to ensure ongoing assurance that your systems and controls remain effective over time. 

You Want to Meet Compliance Requirements 

In regulated industries, a Type 2 report may be necessary to demonstrate compliance with industry standards or regulations that mandate continuous monitoring and improvement of security and privacy controls. 

Corporate team in a meeting discussing differences between SOC 2 Type 1 and Type 2 compliance

Ready to Choose Which SOC 2 Report You Need? 

A SOC 2 report is essential for modern B2B companies. These reports serve as a benchmark for economic and cybersecurity health, often expected by clients. However, there are two types of SOC 2 reports: Type 1 and Type 2, each with distinct features and purposes. 

In essence, Type 1 is suitable for demonstrating compliance at a particular moment. It’s beneficial for startups or meeting immediate contractual requirements. On the other hand, Type 2 offers ongoing assurance. A crucial factor for established businesses looking for long-term partnerships, and regulatory compliance. 

Need help with SOC 2 compliance? Our team of experts at ITS have a lot of experience guiding companies toward certification. Schedule a meeting with us to find out how we can help. 

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