SOC 2 Type I vs Type II: The Complete Guide for Startups

If you're a B2B SaaS founder, you've heard it from enterprise prospects: "Can you send over your SOC 2 report?" It's one of the most common deal blockers — and one of the most misunderstood compliance standards.

This guide breaks down the real difference between SOC 2 Type I and Type II, what each costs, how long they take, and the exact path to get there without wasting months on bureaucratic overhead.

What Is SOC 2?

SOC 2 (System and Organization Controls 2) is an auditing framework developed by the American Institute of CPAs (AICPA). It evaluates how well a company protects customer data across five Trust Service Criteria:

• Security (required) — logical and physical access controls
• Availability — system uptime and performance monitoring
• Processing Integrity — accurate, timely data processing
• Confidentiality — protection of confidential information
• Privacy — personal information handling

Most startups begin with Security only, then add Availability as they grow.

SOC 2 Type I: Point-in-Time Assessment

A SOC 2 Type I report evaluates whether your security controls are designed appropriately at a single point in time. Think of it as an auditor visiting your office and verifying that your policies, procedures, and systems exist and look reasonable.

What Type I Covers

• Written security policies (information security policy, incident response plan, access control policy)
• Vendor management documentation
• Logical access controls (SSO, MFA, least privilege)
• Encryption at rest and in transit
• Change management procedures
• Risk assessment documentation

Type I Timeline

| Phase | Duration | |---|---| | Readiness assessment | 1–2 weeks | | Gap remediation | 2–6 weeks | | Auditor fieldwork | 1–2 weeks | | Report issuance | 1–2 weeks | | Total | 6–12 weeks |

Type I Cost

Expect to spend $15,000–$30,000 for a Type I audit from a reputable CPA firm. Compliance automation platforms (Vanta, Drata, Tugboat Logic) add $10,000–$20,000/year on top, but dramatically reduce the time your team spends on evidence collection.

What Type I Does NOT Prove

This is the critical misunderstanding. Type I proves your controls exist, not that they work over time. A sophisticated enterprise security team will ask for Type II.

SOC 2 Type II: Operational Effectiveness Over Time

A SOC 2 Type II report evaluates whether your controls are operating effectively over an observation period — typically 6 to 12 months. This is the gold standard that enterprise customers actually want.

What Type II Covers

Everything in Type I, plus evidence that your controls ran consistently during the audit period:

• Access review logs (quarterly user access reviews)
• Incident response records (even if no incidents occurred — you need evidence of testing)
• Vulnerability scan results and remediation timelines
• Background check completions for new hires
• Security training completion records
• Penetration test reports and remediation
• Change management tickets with appropriate approvals
• Backup restoration tests

Type II Timeline

| Phase | Duration | |---|---| | Type I (if not done) | 6–12 weeks | | Observation period | 6–12 months | | Auditor fieldwork | 2–4 weeks | | Report issuance | 2–3 weeks | | Total from scratch | 9–15 months |

Pro tip: You can begin the observation period immediately after your controls are in place — you don't need to wait for a Type I report first. Many startups skip Type I entirely and aim directly for Type II.

Type II Cost

$30,000–$80,000 total, depending on auditor, scope (how many Trust Service Criteria), and complexity of your infrastructure. This typically breaks down as:

• Auditor fees: $20,000–$60,000
• Compliance platform: $10,000–$20,000/year
• Internal time (engineering + operations): 200–400 hours

Type I vs Type II: Side-by-Side Comparison

| Factor | Type I | Type II | |---|---|---| | What it proves | Controls designed correctly | Controls operating effectively | | Time period | Single point in time | 6–12 month observation | | Timeline to achieve | 6–12 weeks | 9–15 months | | Cost | $15K–$30K | $30K–$80K | | Accepted by enterprise | Sometimes | Almost always | | Required for Fortune 500 deals | Rarely | Yes | | Good for early-stage fundraising | Yes | Better | | Renewal required | No (point-in-time) | Annually |

Evidence Requirements: What You Actually Need to Collect

This is where most startups get surprised. Here's the practical evidence list for a Type II audit:

Access Control Evidence

• Screenshots of MFA enabled on all production systems
• User access review records (quarterly)
• Offboarding checklists showing access revoked within 24 hours
• Privileged access audit logs

Vulnerability Management Evidence

• Monthly vulnerability scan reports
• Remediation tickets with SLA compliance (critical: 24h, high: 7 days)
• Annual penetration test report
• Evidence of remediation for pentest findings

Change Management Evidence

• Pull request approvals from code reviews
• Staging environment testing records
• Rollback procedures documentation

Incident Response Evidence

• Tabletop exercise records (at least annually)
• Any actual incident response records
• Post-mortems for significant events

HR and Training Evidence

• Background check completions
• Security awareness training completions (all employees, annually)
• New hire security onboarding checklists

The Transition Path: Type I to Type II

If you've already completed Type I, the transition to Type II is straightforward:

Step 1: Start your observation clock immediately. The moment your controls are in place, your observation period begins.

Step 2: Set up continuous evidence collection. Use a compliance platform or a well-organized folder structure. Automate what you can: CloudTrail for AWS activity, GitHub audit logs, Okta access logs.

Step 3: Run your quarterly access reviews. This is the most commonly missed control. Put it in your calendar the day your observation period starts.

Step 4: Schedule your pentest. Most auditors require at least one pentest during the observation period. Schedule it early so you have time to remediate findings before your audit window closes.

Step 5: Engage your auditor early. Share your evidence folder structure with your auditor 3 months before your target audit date. Get their feedback while you still have time to fix gaps.

Step 6: Fieldwork and report. Your auditor will sample evidence from throughout the period. A clean, well-organized evidence vault cuts fieldwork time significantly.

Common Mistakes Startups Make

1. Treating SOC 2 as a one-time project

SOC 2 Type II is an ongoing program, not a checkbox. The controls need to operate continuously or your next audit will surface gaps.

2. Starting too late

If you have an enterprise deal closing in 3 months that requires Type II, you're already behind. Start the moment you have paying customers who ask about security.

3. Under-scoping intentionally

Some startups try to exclude systems from scope to reduce audit effort. Auditors (and customers) see through this. Scope what you actually use.

4. Neglecting vendor management

If you use AWS, Stripe, Twilio, or any SaaS that processes customer data, you need a vendor risk management process. Document it and get their compliance reports.

5. Skipping the pentest

Penetration testing is effectively required for a credible SOC 2 Type II. Don't wait until 2 months before your audit. Learn more in our VAPT methodology guide.

6. Manual evidence collection

Trying to collect screenshots and logs manually across a year-long observation period is a nightmare. Invest in a compliance automation platform from day one.

When to Choose Each

Choose Type I if:

• You need something to show a prospect in the next 90 days
• You're pre-Series A and closing SMB deals
• You want to demonstrate security commitment while building toward Type II

Choose Type II (directly) if:

• Your target customers are mid-market or enterprise
• You're processing health, financial, or other sensitive data
• You want to skip the intermediate step and build once

Need to move fast? Our security compliance sprint can get your controls in place and observation period started within 3 weeks.

The ROI of SOC 2

Beyond closing enterprise deals, SOC 2 has real operational benefits:

• Fewer security incidents — the controls you implement for SOC 2 actually reduce your attack surface
• Faster sales cycles — security questionnaires take hours instead of weeks when you have a report
• Better vendor relationships — enterprise partners feel more confident sharing data with you
• Reduced cyber insurance premiums — many insurers discount premiums for SOC 2-certified organizations

The average enterprise SaaS deal size is 5–10x larger than SMB. If SOC 2 unlocks even one enterprise deal per year, it pays for itself many times over.

Getting Started

The path to SOC 2 doesn't have to take 18 months or cost a fortune. With the right approach:

1. Weeks 1–3: Gap assessment, policy documentation, control implementation
2. Months 1–6: Observation period with automated evidence collection
3. Month 7–9: Auditor fieldwork, remediation, report issuance

We've helped multiple startups go from zero security posture to SOC 2 Type II in under 9 months. The startup security program guide walks through exactly how to build the foundation.

Also see: SOC 1 vs SOC 2 vs SOC 3 — which report do you need?

Ready to get SOC 2 ready? Talk to our team about our 3-week security compliance sprint.