Understanding SOC 2 compliance is essential for businesses handling sensitive customer data. As companies strive to establish trust and demonstrate their commitment to security, the distinction between Type 1 and Type 2 compliance becomes crucial. While both attest to a company’s controls related to data security, availability, processing integrity, confidentiality, and privacy, they serve different purposes and time frames. Type 1 offers a snapshot of compliance at a specific moment, whereas Type 2 assesses the effectiveness of those controls over a designated period. Navigating the complexities of these compliance types can be overwhelming, but distinguishing between them is key to making informed decisions that protect your organization and your clients. In this article, we will break down the essential differences between SOC 2 Type 1 and Type 2 compliance, equipping you with the knowledge to choose the best path for your business’s security journey.
Type 1 audits are essentially a design review. An auditor comes in, looks at your security policies, procedures, and controls, and says "These look reasonable and are properly designed to meet the SOC2 criteria."
Think of it like a restaurant health inspector checking that you have hand-washing stations, thermometers, and proper storage areas. They're not watching you cook for six months—they're just verifying the infrastructure is there.
What gets tested:
Timeline: Usually takes 4-8 weeks from start to finish.
Cost: Generally ranges from $15,000-$40,000 depending on your company size and complexity.
Type 2 audits are where things get real. The auditor doesn't just want to see your beautiful policies, they want evidence that you're actually following them consistently over time.
Back to the restaurant analogy: this time the health inspector is camping out for six months, watching every meal prep, checking temperatures multiple times a day, and making sure staff actually wash their hands every single time.
What gets tested:
Timeline: 6-12 months for the audit period, plus 2-3 months for the actual audit work.
Cost: Typically $30,000-$80,000+ depending on scope and company size.
Go with Type 1 if:
Go with Type 2 if:
The uncomfortable truth: Most sophisticated buyers don't really care about Type 1 reports. It's like showing someone a beautiful business plan versus showing them actual revenue numbers. Which would you trust more?
"Type 1 is easier" - Not really. The control design requirements are the same. You just don't have to prove they work over time.
"We can upgrade from Type 1 to Type 2 later" - Technically yes, but you're basically starting over. The audit periods don't overlap, so you're not saving much work.
"Type 1 is good enough for most customers" - This was maybe true five years ago. Today, most enterprise buyers want Type 2, and that trend is only accelerating.
If you're serious about security and want a report that actually demonstrates your commitment to protecting customer data, Type 2 is worth the extra investment. It's not just about checking a compliance box, it's about building trust with your customers and partners.
Type 1 isn't wrong, but it's increasingly becoming the audit equivalent of a participation trophy. Sure, you get a certificate, but does it really prove anything meaningful about your security posture?
The choice ultimately comes down to where you are as a company and where you want to be. Just don't fool yourself into thinking Type 1 is a shortcut to the same destination, it's a different destination entirely.
Before you commit to either audit type, spend some time talking to your actual customers and prospects. Ask them directly what they need to see. You might be surprised by how specific their requirements are.
And whatever you choose, make sure you're ready for the process. Both audit types require significant internal resources and coordination. The audit itself is just the final exam—the real work happens in the months leading up to it when you're actually building and implementing your security program.
Transform your SOC2 compliance with Regulance AI today. Schedule a demo here with our compliance experts to learn more.
At Regulance, we recognize the challenges B2B SaaS startups face when navigating compliance regulations. Our AI-powered platform automates the process, ensuring you are audit-ready without the hassle. By simplifying data security measures, we empower you to focus on closing more deals while enjoying peace of mind regarding compliance. Let us help you turn compliance anxiety into confidence as you witness the positive impact on your business.