SOC 2

What Is SOC 2?

SOC 2 is an auditing standard developed by the AICPA (American Institute of Certified Public Accountants) that evaluates how a company protects customer data. It's the most commonly requested security credential in B2B software. If you sell SaaS to other businesses, especially mid-market or enterprise buyers, someone will ask for your SOC 2 report within the first few sales cycles.

Unlike ISO 27001, SOC 2 isn't a certification. It's an attestation report written by a licensed CPA firm that gives an opinion on whether your security controls are designed properly (Type 1) or actually working over time (Type 2). The distinction matters: you don't "pass" or "fail" SOC 2. You get a report with the auditor's opinion, and your customers read it to decide if they trust your controls.

The Five Trust Services Criteria

SOC 2 is built around five categories called Trust Services Criteria (TSC):

• Security (required for every SOC 2 report): Protection against unauthorized access. Covers firewalls, access controls, encryption, intrusion detection.
• Availability: Whether your systems stay up and running per your commitments. Relevant if you have SLAs with customers.
• Processing Integrity: Whether your system processes data accurately and completely. Important for fintech, billing platforms, and data pipelines.
• Confidentiality: Whether you protect information designated as confidential. Think NDA-covered data, intellectual property, business plans.
• Privacy: How you handle personal information. Overlaps with GDPR and CCPA requirements.

Only Security is mandatory. Most companies start with Security alone or Security plus Availability, then add criteria in later audit cycles as customers request them.

Type 1 vs Type 2: Which Do You Need?

This is one of the most common questions, and the answer is straightforward.

Type 1 looks at your controls at a single point in time. The auditor checks whether your policies and systems are designed correctly on the day of the audit. It's faster (typically 2-4 weeks of auditor time) and cheaper. Think of it as a snapshot.

Type 2 evaluates whether those controls actually worked over a period, usually 3 to 12 months. The auditor samples evidence throughout that window. Did your access reviews actually happen quarterly? Were security alerts actually investigated? This is what enterprise buyers want to see.

Most companies get a Type 1 first to unblock sales deals quickly, then transition to Type 2 for the next audit cycle. Some skip straight to Type 2 if they already have mature controls. A Type 1 report will satisfy some prospects, but increasingly, procurement teams at larger companies won't accept anything less than a Type 2 with a 6-month or longer observation window.

What the Audit Process Looks Like

Here's what actually happens, step by step:

1. Scoping (1-2 weeks). You decide which Trust Services Criteria to include and which systems are in scope. Scope creep here is expensive, so be deliberate.

1. Readiness assessment (2-6 weeks). Either your compliance tool or a consultant reviews your current controls against SOC 2 requirements. This surfaces gaps you need to fix before the auditor shows up. Skipping this step is the number one reason audits go badly.

1. Remediation (2-8 weeks). Fix the gaps. Write missing policies, enable MFA everywhere, set up access reviews, configure logging. This is where most of the actual work lives.

1. Audit fieldwork (2-4 weeks for Type 1, 1-2 months for Type 2). The CPA firm's auditors request evidence, interview your team, and test controls. For Type 2, they'll sample evidence across the entire observation period.

1. Report issuance (2-3 weeks after fieldwork). The auditor drafts the report, you review it for factual errors, and they issue the final version. The report is confidential and shared with customers under NDA.

Total timeline from kickoff to report in hand: 3-6 months for a first-time Type 1, or 6-12 months if you're going straight to Type 2 with a new observation window.

What It Costs

First-year SOC 2 costs typically land between $20,000 and $60,000 depending on your company size and complexity.

Breaking that down:

• Audit fees from the CPA firm: $10,000-$30,000 for a straightforward Type 2. Larger scope or Big Four firms can push this higher.
• Compliance platform (Vanta, Drata, Sprinto, etc.): $8,000-$25,000/year depending on the tool and your employee count.
• Consulting or readiness assessment: $5,000-$15,000 if you use one.
• Internal time: Hard to quantify, but expect your security lead or CTO to spend 20-40% of their time on the project for 2-3 months.

Renewal years are cheaper since the heavy lifting (policy creation, initial remediation) is done. Budget $15,000-$35,000 annually for ongoing Type 2 reports.

How Compliance Tools Help

The reason compliance automation platforms exist is that SOC 2 evidence collection is tedious. An auditor might request screenshots of your AWS IAM configuration, proof that background checks were completed, evidence that your incident response plan was tested, and 50 other artifacts.

Tools like Vanta, Drata, and Secureframe connect to your cloud infrastructure, HR systems, and identity providers to pull this evidence automatically. They also provide policy templates, track control status in real time, and flag gaps before your auditor finds them. All 17 tools in our database support SOC 2.

The ROI is real: companies using automation platforms typically cut audit prep time by 50-70% and reduce the back-and-forth with auditors significantly. For a 50-person startup, that might save 200+ hours of engineering and security team time.

Common Mistakes to Avoid

Starting too late. Sales tells you a prospect needs your SOC 2 report in 6 weeks. That's not happening for a first-time audit. Start the process before you need the report, ideally 4-6 months ahead of when you expect enterprise sales conversations.

Scoping too broadly. Including every system in your environment makes the audit longer and more expensive. If your marketing website doesn't touch customer data, it probably doesn't need to be in scope.

Treating it as a one-time project. SOC 2 Type 2 requires continuous evidence. If you ace the audit in March and then stop doing quarterly access reviews, your next audit will surface exceptions. The controls need to actually run year-round.

Ignoring the readiness gap. Going straight into an audit without a readiness assessment is like taking a test you haven't studied for. You'll burn audit fees on an engagement that surfaces problems you could have fixed beforehand.

Not reading your own report. Your SOC 2 report will list any exceptions the auditor found. Prospects read these carefully. If your report has 12 exceptions and your competitor's has zero, that matters in a deal. Review your own report and fix recurring issues before the next cycle.