SOC 2 Type 1 vs Type 2: Which Report Is Right for Your Business?

Last Updated on January 27, 2026 by Narendra Sahoo

Cybersecurity is no longer evaluated by intent or policy statements. Customers, partners, and enterprise procurement teams now expect independent assurance that security controls are properly designed and consistently followed. This shift has made SOC 2 compliance a baseline requirement for organizations that handle customer data, particularly SaaS providers, cloud service companies, and technology vendors.

As a result, one of the most common questions security leaders face is whether to pursue SOC 2 Type 1 or SOC 2 Type 2. While both reports are based on the same Trust Services Criteria, they serve different purposes and signal different levels of security maturity to customers.

Understanding the difference between SOC 2 Type 1 and Type 2 is essential, as the choice directly impacts audit timelines, costs, and customer acceptance. In this guide, we explain the practical differences between the two reports and help you determine which option best fits your organization’s current stage and business objectives.

1️⃣ Why SOC 2 Compliance Has Become a Necessity

Organizations are no longer evaluated on security intent alone. Customers and enterprise buyers now expect independent assurance that security controls are properly designed and aligned with recognized standards when sensitive data is involved.

SOC 2 has become the preferred framework for delivering this assurance, particularly for SaaS companies, cloud service providers, and technology vendors. A SOC 2 report issued by a licensed CPA validates that controls align with the Trust Services Criteria.

Today, SOC 2 compliance directly impacts vendor onboarding, sales cycles, and customer due diligence. This is why understanding the difference between SOC 2 Type 1 and SOC 2 Type 2 is critical, as each report signals a different level of security maturity.

2️⃣ What is SOC 2 audit

A SOC 2 audit evaluates whether an organization has implemented controls that align with the Trust Services Criteria: Security, Availability, Processing Integrity, Confidentiality, and Privacy. It focuses on how systems and processes protect customer data in real-world operating environments.

The audit applies to service organizations that store, process, or transmit client data, including SaaS providers, cloud platforms, and managed service companies. It is conducted by a licensed CPA firm and follows standards defined by the AICPA.

 

3️⃣ Types of SOC 2 report

SOC 2 audits are divided into two types—SOC 2 Type 1 and SOC 2 Type 2. Both focus on the five trust principles, but they serve different purposes in terms of depth and timeline.

Quick tip: If you’re unsure which trust principles apply to your business, you might want to revisit our earlier article: SOC 2 Trust Service Criteria.

👉 SOC 2 Type 1 Definition:

SOC 2 Type 1 is a report on a service organization’s system and the suitability of the design of controls. The report describes the current systems and controls in place and review documents around these controls. Design sufficiency of all Administrative, Technical and Logical controls are validated.

👉 SOC 2 Type 2 Definition:

SOC 2 Type 2 Report is very similar to the Type 1 report, except that the evidence of control effectiveness are described and evaluated for a minimum of six months to see if the systems and control in place are functioning as described by the management of the service organization. 

(Note- SOC 2 Type 1 & SOC 2 Type 2 are two different stages of achieving SOC 2 Compliance.)  

4️⃣ SOC 2 Type 1 vs Type 2 – Key Differences

The most significant difference lies in the depth of testing and time frame.

• Type 1: Point-in-time report (e.g., as of March 2025). Focuses on design sufficiency.

• Type 2: Covers operational effectiveness over 6–12 months. More thorough but also more time-consuming and costly.

Feature	SOC 2 Type 1	SOC 2 Type 2
Scope	Design of controls	Design + operational testing
Timeline	Point-in-time snapshot	6–12 months testing period
Cost	Lower	Higher
Best For	New compliance or startups	Mature organizations with ongoing controls
Customer Appeal	Moderate	Strong assurance of security maturity

👉 Why the Difference Matters

Choosing between Type 1 and Type 2 is not just a compliance decision, it is a business decision. The wrong choice can delay deals, increase audit costs, or fail to meet customer expectations during security reviews.

Understanding these differences early helps organizations align their SOC 2 strategy with sales timelines, customer requirements, and long-term security maturity.

5️⃣ Which One Should You Choose – SOC 2 Type 1 or Type 2??

For many organizations, SOC 2 Type 1 is the natural starting point. It is faster to complete, requires lower upfront effort, and helps establish a formal compliance baseline that can be shared with customers early.

SOC 2 Type 2, however, provides a higher level of assurance. It demonstrates that security controls are not only designed correctly but are also operating consistently over time, which is why enterprise customers often expect it.

The right choice depends on your business stage, customer expectations, and sales timelines. In many cases, organizations begin with Type 1 and progress to Type 2 as their control maturity increases.

👉 SOC 2 Type 1 Audit: A Starting Point for Businesses

SOC 2 Type 1 evaluates the design of controls at a specific point in time. It confirms that administrative, technical, and logical controls are formally defined and aligned with SOC 2 requirements.

This report is particularly useful for organizations that need to demonstrate security intent quickly. It provides customers with baseline assurance that appropriate controls are in place, even if they have not yet been tested over an extended period.

Type 1 is best suited for companies that are new to SOC 2, operating under tight timelines, or planning a phased approach toward full compliance.

Example:
A growing SaaS company responding to early enterprise security questionnaires may use a Type 1 report to demonstrate readiness while preparing for Type 2 in the next audit cycle.

Who should consider Type 1?

Organizations that are new to SOC 2 compliance or pressed for time often begin with a Type 1 audit because:

• It’s faster to complete (usually within 3 months).

• It’s less expensive compared to Type 2.

• It’s an ideal starting point for companies planning to upgrade to Type 2 later.

In short, SOC 2 Type 1 is the “quick win” for organizations seeking immediate credibility and a foundation for future, more robust audits.

👉 SOC 2 Type 2 Audit: Higher Assurance for Bigger Contracts

SOC 2 Type 2 builds on Type 1 by assessing the operating effectiveness of controls over time, typically across six to twelve months. Auditors validate evidence to confirm that controls are consistently followed in practice.

Because of this, Type 2 carries significantly more weight with enterprise customers, regulators, and procurement teams. It signals a higher level of security maturity and operational discipline.

Although Type 2 requires more time and investment, it often enables organizations to qualify for larger contracts and pass more rigorous vendor risk assessments.

Example:
A cloud service provider targeting large enterprise or regulated clients will benefit more from a Type 2 report, as it proves controls work continuously, not just on paper.

Also Read:- Benefits Of SOC 2 Certification

6️⃣ SOC 2 Type 1 vs Type 2 – Cost & Timeline

Cost and timeline are often the deciding factors when organizations choose between SOC 2 Type 1 and Type 2. While both audits assess the same Trust Services Criteria, the level of effort and duration required to complete them differ significantly.

👉 SOC 2 Type 1

SOC 2 Type 1 is typically completed over a shorter timeframe, as it evaluates the design of controls at a single point in time. Because evidence collection is limited to policies and control documentation, the overall audit effort and cost remain relatively low.

This option is well suited for organizations that need quick compliance validation, are responding to early customer security requirements, or are preparing for a phased move toward SOC 2 Type 2.

👉 SOC 2 Type 2

SOC 2 Type 2 requires a longer audit timeline, as controls must be observed and tested over a defined period, usually between six and twelve months. This extended evaluation increases both audit complexity and internal resource commitment.

Although more time-consuming and costly, SOC 2 Type 2 delivers a higher level of assurance and is often preferred by enterprise customers, regulated industries, and procurement teams conducting in-depth vendor risk assessments.

7️⃣ SOC 2 Type 1 to Type 2 Upgrade Path

For most organizations, SOC 2 compliance is not a one-time activity but a progressive journey. It is common to begin with SOC 2 Type 1 and then transition to SOC 2 Type 2 once controls have been operating consistently over time.

SOC 2 Type 1 establishes the foundation by validating that security controls are properly designed and documented. After this baseline is in place, organizations typically spend the next several months refining processes, collecting evidence, and ensuring controls are executed consistently before entering a Type 2 observation period.

The transition from Type 1 to Type 2 does not require redesigning controls, but it does require discipline and operational maturity. Logging, monitoring, access reviews, incident response testing, and change management must function reliably throughout the observation window.

Organizations that plan this upgrade early are better positioned to align audit timelines with enterprise sales cycles and customer expectations. In practice, many companies complete a Type 1 audit, operate controls for six to twelve months, and then pursue Type 2 to meet higher assurance requirements.

8️⃣ What Enterprise Customers Expect in 2026

Enterprise customers in 2026 no longer evaluate vendors based on security statements or partial assurances. They expect independent, audit-backed evidence that security controls are not only defined but consistently followed across systems and processes.

During vendor risk assessments, procurement and security teams increasingly look for SOC 2 Type 2 reports as proof of operational maturity. Type 1 reports may still be accepted at early stages, but they are often viewed as transitional rather than sufficient for long-term partnerships.

Beyond the report itself, enterprises expect clear scoping, well-documented controls, and a structured approach to risk management. Organizations that align their SOC 2 strategy with these expectations are more likely to pass security reviews efficiently and shorten enterprise sales cycles.

9️⃣ Common SOC 2 Mistakes We See During Audits

One of the most common mistakes organizations make is choosing SOC 2 Type 2 too early. Without stable, consistently operating controls, this often leads to failed tests, extended audit timelines, and unnecessary rework.

Another frequent issue is poor evidence management. Policies may exist, but logs, access reviews, incident records, or change approvals are incomplete or inconsistent, making it difficult to demonstrate operational effectiveness during the audit period.

Organizations also underestimate the importance of scope definition. Including unnecessary systems or excluding critical ones can create gaps that weaken the report and raise concerns during customer security reviews.

Finally, many teams treat SOC 2 as a documentation exercise rather than an operational discipline. SOC 2 audits reward organizations that embed controls into daily processes, not those that prepare only for the audit window.

🔟 SOC 2 Type 1 vs Type 2 – Quick Decision Checklist

Use the checklist below to quickly determine which SOC 2 report is the right fit for your organization.

👉 Choose SOC 2 Type 1 if:

• You are pursuing SOC 2 compliance for the first time

• Customers need proof that controls are designed and documented

• You are under tight sales or onboarding timelines

• Your controls are newly implemented and not yet mature

• You plan to transition to SOC 2 Type 2 later

👉 Choose SOC 2 Type 2 if:

• Enterprise or regulated customers explicitly require it

• Your controls have been operating consistently for several months

• You need stronger assurance for vendor risk assessments

• You want to demonstrate long-term security maturity

• You are targeting large or recurring enterprise contracts

In practice, many organizations start with SOC 2 Type 1 to establish a baseline and then progress to SOC 2 Type 2 once controls are fully operational.

1️⃣1️⃣ How to Decide the Right SOC 2 Path for Your Organization

 

You can watch the video here

Faq

1. Why do businesses start with SOC 2 Type 1 instead of going directly for Type 2?

Many companies choose SOC 2 Type 1 as a strategic first step because it is faster, less costly, and provides an immediate compliance framework to showcase to clients. Type 1 acts as a readiness assessment, helping organizations identify gaps in controls before committing to the longer and more intensive Type 2 audit. Once the foundation is set, moving to Type 2 becomes smoother and more efficient.

2. Does SOC 2 Type 2 guarantee better security than Type 1?

Not exactly. Both audits verify that an organization has strong security controls, but Type 2 offers ongoing proof that these controls work effectively over time. It’s not about “better security,” but rather higher trust and confidence for clients who want to see continuous operational excellence rather than a single-point-in-time review.

3. How do I decide if my organization is ready for SOC 2 Type 2?

Your readiness depends on factors like internal control maturity, resources, and client expectations. If your team already follows well-defined security policies, monitors controls consistently, and has at least 6–12 months of data to back it up, you’re likely ready for Type 2. However, if you’re still formalizing policies and frameworks, starting with Type 1 is the smarter approach.

4. Can SOC 2 compliance really help me win more clients?

Absolutely. SOC 2 certification is often a deciding factor for potential clients, especially in industries like SaaS, fintech, and healthcare. A Type 2 report, in particular, sends a clear signal that your organization is trustworthy, security-conscious, and committed to protecting data, which can give you a competitive edge during vendor evaluations.