SOC 2 Type I vs Type II: What Are The Differences?
In an era where trust is as valuable as technology, proving that your company protects customer data has become a competitive advantage. One of the most effective ways to demonstrate this commitment is by obtaining a SOC 2 report, an independently verified framework for managing information security.
Quick Comparison: Type I vs Type II
Evaluates control design at a single moment - faster and less expensive
Tests control effectiveness over 3-12 months - more comprehensive assurance
Depends on your growth stage, customer requirements, and timeline
For startups, SaaS providers, and service organizations handling sensitive client data, SOC 2 compliance isn't just a checkbox for risk management, but increasingly a requirement for winning business, entering new markets, and earning enterprise trust.
But not all SOC 2 reports are the same. Companies can choose between SOC 2 Type I and SOC 2 Type II, each serving distinct purposes, timeframes, and budgets. Understanding these differences will help you align your compliance efforts with your growth stage and business goals.
What Is SOC 2?
SOC 2 (Service Organization Control 2) is a standard developed by the American Institute of Certified Public Accountants (AICPA). It evaluates how well a company safeguards customer data according to the Trust Services Criteria (TSC):
Security - Protection against unauthorized access.
Availability - Reliability and accessibility of systems.
Processing integrity - Accuracy and completeness of data processing.
Confidentiality - Protection of information classified as confidential.
Privacy - Proper handling of personal data.
A SOC 2 report, issued by a licensed CPA firm, outlines how your internal controls address these criteria. It can be shared with customers, partners, and prospects - typically under a non-disclosure agreement - to provide assurance that you operate securely and responsibly.
Why SOC 2 Matters
Obtaining SOC 2 certification signals that your organization takes data protection seriously. It demonstrates:
Credibility and trust with enterprise clients and partners.
Market expansion opportunities, as many U.S. companies require SOC 2 from their vendors.
Operational maturity, through well-documented, repeatable security practices.
Risk reduction, by identifying and closing vulnerabilities before they lead to incidents.
Both SOC 2 Type I and Type II are widely adopted across:
SaaS and cloud service providers
FinTech and payment processing firms
Healthcare and MedTech companies
HRTech and data analytics platforms
IT and managed service providers
Beyond compliance, SOC 2 fosters a security-first culture that scales as your business grows.
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How Is SOC 2 Type I Different From SOC 2 Type II?
Both SOC 2 Type I and Type II audits evaluate the same set of security controls - but the scope, duration, and depth of testing differ.
| Aspect | SOC 2 Type I | SOC 2 Type II |
|---|---|---|
| Purpose | Evaluates whether controls are properly designed and implemented at a specific point in time. | Evaluates whether controls operate effectively over a defined period of time. |
| Audit Window | Single day ("snapshot"). | Continuous period, usually 3-12 months. |
| Objective | Tests the design of controls. | Tests the design and operational effectiveness of controls. |
| Duration | 1-2 months from readiness to completion. | 6-12 months including evidence gathering. |
| Cost | Lower ($8.000 - $15.000). | Higher ($15.000 - $30.000+). |
| Depth | Confirms controls exist. | Confirms controls work as intended. |
| Use Case | Startups seeking quick validation. | Mature companies seeking long-term trust. |
In short, Type I proves the readiness of your security controls, while Type II proves their reliability over time.
What Is a SOC 2 Type I Report?
A SOC 2 Type I audit evaluates the design and implementation of your security controls at a single point in time. The auditor examines whether your policies, tools, and processes - such as access control, incident response, and risk management - are appropriately structured to meet the Trust Services Criteria.
However, a Type I report does not assess how well those controls function over time. It tells customers that you have the right systems in place, but not whether they have been tested in practice.
This makes SOC 2 Type I ideal for companies that:
Are new to compliance and need to demonstrate a baseline of security maturity.
Face sales pressure from clients requiring a SOC 2 report to close deals quickly.
Want a faster and less expensive audit path to enter new markets.
Because it covers only one moment in time, the audit can usually be completed within 4-8 weeks, making it an achievable starting point for early-stage companies.
What Is a SOC 2 Type II Report?
A SOC 2 Type II audit extends beyond design and evaluates the operational effectiveness of your security controls over several months, typically between 3-12 months. The auditor reviews continuous evidence such as access logs, change management records, vulnerability reports, and incident documentation to confirm that your controls work consistently.
This makes SOC 2 Type II more comprehensive, as it demonstrates that your organization not only has the right controls in place but also follows them reliably.
Type II is ideal for companies that:
Serve enterprise or regulated customers requiring proof of long-term compliance.
Want to differentiate themselves through a robust security posture.
Have already achieved a Type I and are ready for sustained monitoring and reporting.
Because of its extended testing window and evidence requirements, a Type II audit is longer and more expensive, but it provides a stronger level of assurance to your partners and clients.
Key Decision Factors
When deciding between SOC 2 Type I and Type II, consider these three practical factors:
1. Strength of Reporting
A Type II report provides deeper assurance because it tracks control performance over time. If your clients handle sensitive or regulated data - such as financial, medical, or personal information - a Type II report will inspire more confidence.
A Type I report, on the other hand, is suitable if your priority is to show that controls are designed correctly, not necessarily how they perform day-to-day. Many startups use it as an entry point before transitioning to Type II as their business grows.
Who Should Get SOC 2 Type I vs. Type II?
| Company Profile | Recommended Audit Type |
|---|---|
| Early-stage startups entering compliance | Type I |
| Startups facing enterprise sales blockers | Type I (then upgrade to Type II) |
| Growth-stage SaaS or FinTech companies | Type II |
| Enterprises or regulated vendors | Type II |
| Companies handling sensitive personal data | Type II |
Many organizations use a phased approach - starting with Type I to establish readiness, then advancing to Type II to demonstrate long-term operational consistency.
2. Timeline and Speed
If a pending contract or partnership requires proof of SOC 2 compliance urgently, a Type I audit allows you to respond quickly.
If you have more flexibility and aim to build credibility with large or enterprise clients, a Type II report is worth the additional time investment. Many organizations begin with a shorter audit window (e.g., three months) and extend it in future cycles to signal increasing maturity.
While the exact timeline varies, here's what a typical SOC 2 journey looks like:
| Phase | SOC 2 Type I | SOC 2 Type II |
|---|---|---|
| Readiness and Gap Assessment | 2-4 weeks | 2-4 weeks |
| Implementation and Remediation | 1-2 months | 1-2 months |
| Audit Period | Single day | 3-12 months |
| Auditor Review and Report | 2-4 weeks | 4-8 weeks |
| Total Duration | ~2-3 months | ~8-14 months |
Type I offers faster validation; Type II requires patience but delivers stronger long-term value.
3. Cost
The cost of SOC 2 compliance depends on factors such as company size, number of systems in scope, and complexity of your evidence. Generally, a Type I audit costs less due to its shorter duration and limited evidence testing.
However, if your customers eventually require Type II, companies often skip Type I altogether and proceed directly to Type II to save money in the long run.
| Company Size | Type I | Type II |
|---|---|---|
| Startup / SME | $8.000 - $12.000 | $15.000 - $25.000 |
| Mid-Market | $10.000 - $18.000 | $20.000 - $35.000 |
| Enterprise | $15.000 - $25.000 | $30.000 - $50.000+ |
These figures include audit fees only. Additional costs may arise from consultant support, readiness assessments, or compliance automation platforms.
Automating SOC 2 Compliance
Both SOC 2 Type I and Type II can be complex and resource-intensive, particularly for small teams. Collecting evidence, maintaining logs, and coordinating audits manually can consume hundreds of staff hours.
Automation platforms like Smartly streamline this process by:
Centralizing evidence collection across cloud services, HR systems, and access tools.
Monitoring controls continuously to detect non-compliance before an audit.
Mapping controls automatically to SOC 2 requirements and Trust Services Criteria.
Providing audit-ready dashboards for real-time visibility of compliance progress.
Connecting directly with auditors, reducing back-and-forth communication.
With Smartly, teams can become SOC 2-ready in as little as 30 days, automating up to 70% of manual compliance tasks!
Final Thoughts
Choosing between SOC 2 Type I and Type II depends on where your company is today and where it wants to be tomorrow.
If you are an early-stage startup needing fast validation to unlock sales, Type I offers a practical entry point. If you are scaling and want to demonstrate long-term reliability to enterprise clients, Type II will deliver the credibility you need.
Regardless of which path you choose, the goal is the same: to create a secure, transparent, and trustworthy organization. With automation platforms like Smartly, achieving SOC 2 no longer needs to be complex, costly, or time-consuming.