If you are a growing business that handles customer data, the question is not whether you will need SOC 2 compliance but when. Increasingly, enterprise customers and partners require SOC 2 reports as a condition of doing business. Sales cycles stall when prospects ask for your SOC 2 report and you do not have one. RFPs disqualify vendors who cannot demonstrate compliance. And the trend is accelerating: what was once a nice-to-have for SaaS companies is becoming a baseline expectation across industries.
This guide explains what SOC 2 actually is, who needs it, what it takes to get there, and how to maintain it without letting compliance become a full-time job.
What Is SOC 2?
SOC 2 (System and Organization Controls 2) is an auditing framework developed by the American Institute of Certified Public Accountants (AICPA). It evaluates how an organization manages customer data based on five Trust Service Criteria.
SOC 2 is not a certification in the traditional sense. There is no pass/fail grade and no certifying body that stamps your report. Instead, an independent CPA firm examines your controls and issues a report describing what they found. Your customers and prospects review that report to assess whether your security practices meet their standards.
This distinction matters because it means the quality of your SOC 2 report depends on both the rigor of your controls and the thoroughness of your auditor. A superficial audit from a cut-rate firm produces a report that sophisticated customers will see through.
Who Needs SOC 2?
You almost certainly need SOC 2 if:
- You are a SaaS company or cloud service provider that stores, processes, or transmits customer data
- Enterprise prospects ask for your SOC 2 report during the sales process
- You are responding to RFPs that list SOC 2 as a requirement
- You handle financial, health, or personally identifiable information (PII) for clients
- Your business partners or investors require evidence of security practices
You may not need SOC 2 (yet) if:
- You are a small business that handles only your own internal data
- Your customers are primarily consumers rather than businesses
- No one in your sales pipeline has asked for a compliance report
- A simpler framework (like SOC 2 Type I or a security questionnaire) would satisfy current customer needs
The strategic consideration: Even if nobody is asking for SOC 2 today, getting ahead of the requirement creates a competitive advantage. The company that can hand over a SOC 2 Type II report during a sales cycle closes deals faster than the one that says “we are working on it.”
The 5 Trust Service Criteria
SOC 2 evaluates your organization against five criteria. Security is always required; the other four are optional and selected based on your business context.
1. Security (Required)
The security criterion is the foundation of every SOC 2 report. It addresses protection of information and systems against unauthorized access, both physical and logical.
What auditors evaluate:
- Access controls (who can access what, and how is access provisioned and revoked)
- Network security (firewalls, intrusion detection, network segmentation)
- Endpoint protection (antivirus/EDR, patch management, device management)
- Change management (how code and infrastructure changes are controlled)
- Incident response (how security events are detected, responded to, and recovered from)
- Vulnerability management (scanning, patching, remediation tracking)
- Security awareness training for employees
- Vendor and third-party risk management
2. Availability (Optional)
Availability addresses whether your systems are operational and accessible as committed in contracts or SLAs.
What auditors evaluate:
- Uptime monitoring and reporting
- Disaster recovery and business continuity plans
- Capacity planning
- Backup and restoration procedures
- Incident response for availability events
Include this criterion if: You provide services with uptime SLAs, your customers depend on your platform for their operations, or your contracts specify availability commitments.
3. Processing Integrity (Optional)
Processing integrity addresses whether system processing is complete, valid, accurate, timely, and authorized.
What auditors evaluate:
- Data processing accuracy controls
- Error handling and correction procedures
- Quality assurance processes
- Input validation and output verification
Include this criterion if: You process transactions, perform calculations, or generate reports that your customers rely on for accuracy (financial services, data analytics, payroll processing).
4. Confidentiality (Optional)
Confidentiality addresses the protection of information designated as confidential (trade secrets, business plans, intellectual property, non-public financial information).
What auditors evaluate:
- Data classification policies
- Encryption at rest and in transit
- Access restrictions based on data classification
- Secure disposal of confidential information
- Non-disclosure agreements and confidentiality policies
Include this criterion if: You handle client intellectual property, trade secrets, pre-release information, or data explicitly classified as confidential.
5. Privacy (Optional)
Privacy addresses the collection, use, retention, disclosure, and disposal of personal information in accordance with your privacy notice and applicable regulations.
What auditors evaluate:
- Privacy notice accuracy and completeness
- Consent mechanisms
- Data subject rights (access, correction, deletion)
- Data retention and disposal policies
- Cross-border data transfer controls
Include this criterion if: You collect and process personal information from individuals (not just businesses), especially if you are subject to privacy regulations like GDPR, CCPA, or state privacy laws.
Which Criteria Should You Include?
Most growing businesses start with Security alone or Security plus Availability. Adding criteria increases audit scope, cost, and preparation time. Start with what your customers are actually asking for, and expand in subsequent audit cycles as business needs evolve.
Type I vs. Type II: Understanding the Difference
SOC 2 reports come in two types, and the distinction is critical.
SOC 2 Type I
A Type I report evaluates the design of your controls at a single point in time. The auditor examines whether you have appropriate controls in place and whether they are suitably designed to meet the Trust Service Criteria.
Think of it as: A snapshot that shows you have built the right controls.
Timeline: 1-3 months of preparation, audit conducted at a single point in time.
When to pursue Type I:
- You need a SOC 2 report quickly (a deal depends on it)
- You are building your compliance program for the first time
- You want to validate your controls before committing to a Type II audit
SOC 2 Type II
A Type II report evaluates both the design and operating effectiveness of your controls over a period of time (typically 6-12 months). The auditor examines whether your controls are not only well-designed but actually working consistently throughout the review period.
Think of it as: A movie that shows your controls work reliably over time.
Timeline: 3-6 months of preparation, followed by a 6-12 month observation period, then the audit itself.
When to pursue Type II:
- Your customers specifically request Type II (most enterprise buyers do)
- You have already completed a Type I and want to demonstrate ongoing effectiveness
- You want the strongest evidence of your security practices
The Typical Progression
Most companies follow this path:
- Gap assessment to understand where you stand (1-2 months)
- Remediation to close identified gaps (2-4 months)
- SOC 2 Type I to validate control design (1-3 months)
- SOC 2 Type II to demonstrate ongoing effectiveness (6-12 month observation + audit)
Some organizations skip Type I and go directly to Type II if they have the maturity and can afford the longer timeline.
Timeline and Cost Expectations
Realistic Timeline
From scratch to Type II report: 12-18 months total.
- Gap assessment: 2-4 weeks
- Remediation: 2-6 months (highly variable depending on current state)
- Type I audit (optional): 1-2 months
- Type II observation period: 6-12 months
- Type II audit and report: 1-2 months
If you already have strong security practices: 6-9 months to Type II.
Cost Breakdown
Audit fees (Type I): $15,000-$40,000 depending on scope, company size, and auditor.
Audit fees (Type II): $25,000-$75,000 depending on scope, company size, number of criteria, and auditor reputation.
Compliance platform: $10,000-$30,000/year for tools like Vanta, Drata, Secureframe, or Sprinto that automate evidence collection, policy management, and continuous monitoring. These platforms have made SOC 2 dramatically more accessible for smaller companies.
Remediation costs: Highly variable. If you already have decent security practices, remediation may cost $5,000-$20,000 in tooling and configuration. If you are starting from scratch, expect $30,000-$100,000+ for tooling, infrastructure changes, and potentially additional staff.
Consulting support: $10,000-$50,000 for readiness assessment, gap remediation guidance, and audit preparation. This is where a compliance consultant can save you significant time and money by helping you focus on what matters and avoid over-engineering.
Ongoing maintenance: $20,000-$50,000/year for platform subscriptions, annual audits, and continuous control monitoring.
Total first-year cost for a 50-person company: $60,000-$200,000 depending on current maturity and scope.
Common Gaps (and How to Close Them)
Based on our experience helping businesses prepare for SOC 2, these are the gaps we see most frequently.
Access Management
The gap: No formal process for granting, reviewing, or revoking access. Departed employees still have active accounts. Admin access is shared or overly broad.
How to close it:
- Implement a formal access provisioning and deprovisioning process tied to HR
- Conduct quarterly access reviews for all critical systems
- Enforce the principle of least privilege
- Eliminate shared accounts and implement individual, auditable credentials
- Deploy SSO and MFA across all business-critical systems
Change Management
The gap: Code and infrastructure changes are made without formal review, approval, or documentation. There is no separation between development and production environments.
How to close it:
- Implement a change management policy with documented approval workflows
- Require code reviews before merging to production
- Maintain separate development, staging, and production environments
- Log all changes with timestamps, approvers, and descriptions
- Implement automated deployment pipelines with built-in controls
Incident Response
The gap: No documented incident response plan. No defined roles or communication procedures. Incidents are handled ad hoc.
How to close it:
- Write an incident response plan that defines severity levels, roles, escalation paths, and communication procedures
- Conduct tabletop exercises at least annually
- Implement monitoring and alerting that can detect security events
- Document post-incident reviews and track remediation of findings
- Define external notification requirements (legal, regulatory, customer)
Vendor Management
The gap: No formal evaluation of third-party vendors who access or process customer data. No record of vendor security assessments.
How to close it:
- Inventory all vendors who access, process, or store customer data
- Assess vendor security through questionnaires, SOC 2 reports, or security certifications
- Include security requirements in vendor contracts
- Conduct annual vendor reviews
- Monitor critical vendors for security incidents
Security Awareness Training
The gap: No formal security training program. Employees have not been trained on phishing, password security, or data handling.
How to close it:
- Implement annual security awareness training for all employees
- Conduct regular phishing simulations
- Track completion rates and training effectiveness
- Include security training in new employee onboarding
- Document the training program and maintain completion records
Logging and Monitoring
The gap: Insufficient logging of system activity. No centralized log management. No monitoring or alerting for security events.
How to close it:
- Enable audit logging on all critical systems (cloud platforms, applications, network devices)
- Centralize logs in a SIEM or log management platform
- Configure alerts for suspicious activity (failed logins, privilege escalation, unusual data access)
- Retain logs for a minimum of one year (some frameworks require longer)
- Review logs regularly and investigate anomalies
SOC 2 Preparation Checklist
Use this checklist to assess your readiness and identify work remaining:
Policies and Documentation
- Information security policy
- Acceptable use policy
- Access control policy
- Change management policy
- Incident response plan
- Business continuity / disaster recovery plan
- Data classification policy
- Vendor management policy
- Risk assessment documentation
Technical Controls
- Multi-factor authentication on all critical systems
- Endpoint protection (EDR) on all devices
- Automated patch management
- Network security (firewall, segmentation, monitoring)
- Encryption at rest and in transit for customer data
- Backup and recovery tested regularly
- Centralized logging and monitoring
- Vulnerability scanning on a regular schedule
Operational Controls
- Formal access provisioning and deprovisioning process
- Quarterly access reviews
- Change management with documented approvals
- Security awareness training program
- Vendor security assessment process
- Annual risk assessment
- Incident response testing (tabletop exercise)
- Background checks for employees with system access
Audit Preparation
- Compliance platform configured and collecting evidence
- All policies reviewed and current
- Evidence organized and accessible
- Audit firm selected and engaged
- Observation period window defined (for Type II)
- Key personnel identified and briefed on their role in the audit
Ongoing Maintenance
SOC 2 is not a one-time project. Once you have your report, you need to maintain it.
Continuous activities:
- Monitor controls through your compliance platform
- Collect evidence automatically wherever possible
- Address control exceptions promptly
- Track and remediate findings from the prior audit
Quarterly activities:
- Conduct access reviews
- Review and update risk assessment
- Review vendor security status
- Test backup restoration
Annual activities:
- Conduct the SOC 2 audit (your report needs to be refreshed annually)
- Update all policies and procedures
- Perform a comprehensive risk assessment
- Conduct incident response tabletop exercise
- Complete security awareness training for all employees
- Review and update the scope of your SOC 2 report
How SBK Can Help
Preparing for SOC 2 can feel overwhelming, especially for growing businesses without a dedicated compliance team. Our compliance practice works with businesses at every stage of the SOC 2 journey:
- Gap assessment: We evaluate your current state against SOC 2 requirements and produce a prioritized remediation roadmap
- Remediation support: We help close gaps in policies, controls, and tooling without over-engineering
- Audit preparation: We ensure evidence is organized, personnel are prepared, and the audit runs smoothly
- Ongoing maintenance: We provide ongoing advisory support to keep your compliance program current
We work alongside your team and your auditor, not as a replacement for either. Our role is to make the process efficient, practical, and proportionate to your business size and risk profile. We are vendor-neutral — we recommend the compliance platforms and auditors that fit your situation, not the ones that pay us referral fees.
Our cybersecurity services complement our compliance work by ensuring the technical controls underlying your SOC 2 program are genuinely effective, not just compliant on paper.
Frequently Asked Questions
How long does it take to get SOC 2 compliant?
From a standing start, expect 12-18 months to achieve a SOC 2 Type II report. This includes 2-6 months for gap assessment and remediation, followed by a 6-12 month observation period for the Type II audit. If you already have strong security practices in place, the timeline can compress to 6-9 months. A SOC 2 Type I (point-in-time) can be completed in 3-6 months and can serve as an interim step while you work toward Type II.
How much does SOC 2 compliance cost?
First-year costs for a 50-person company typically range from $60,000 to $200,000, covering audit fees ($25,000-$75,000 for Type II), compliance platform ($10,000-$30,000/year), remediation ($5,000-$100,000+ depending on current state), and consulting support ($10,000-$50,000). Ongoing annual costs are typically $40,000-$80,000 for the audit, platform, and maintenance. Compliance automation platforms have significantly reduced costs compared to five years ago.
What is the difference between SOC 2 Type I and Type II?
Type I evaluates the design of your controls at a single point in time — it confirms you have the right controls in place. Type II evaluates both design and operating effectiveness over a period of time (typically 6-12 months) — it confirms your controls work consistently. Most enterprise customers require Type II because it provides stronger assurance. Many companies start with Type I to validate their program and then progress to Type II.
Can we do SOC 2 without a consultant?
Yes, especially with modern compliance automation platforms (Vanta, Drata, Secureframe) that provide templates, automated evidence collection, and guided workflows. However, a consultant can significantly reduce the time and effort required by helping you avoid common mistakes, focus on what auditors actually care about, and prevent over-engineering controls that are not necessary for your scope. The cost of consulting often pays for itself in reduced audit findings and faster time to report.
What happens if we fail a SOC 2 audit?
Technically, you cannot “fail” a SOC 2 audit since there is no pass/fail grade. However, the auditor can issue a qualified opinion if they identify significant control deficiencies or exceptions. A qualified opinion is essentially a red flag that tells your customers your controls have material weaknesses. To avoid this, conduct a thorough readiness assessment before engaging the auditor, address all significant gaps during remediation, and work closely with your auditor to understand their expectations before the formal audit begins.