What Is SOC 2? A Simple Explanation for Founders

SOC 2 is an independent audit that proves your company can be trusted with customer data. That’s it. If you want the complete picture with all the details, check out our comprehensive SOC 2 compliance guide. But if you just need to understand the basics quickly, keep reading.

The Home Inspection Analogy

Think about buying a house. You wouldn’t just take the seller’s word that the plumbing works and the roof doesn’t leak. You’d hire an independent home inspector to verify everything is actually in good shape.

SOC 2 works the same way for your company’s security.

When you claim “we take security seriously,” your customers have no way to verify that. A SOC 2 audit brings in an independent auditor (a CPA firm) to inspect your security practices and confirm you actually do what you say you do.

The result is a formal report - not a certificate or badge - that you can share with customers as proof. It’s like handing over that home inspection report to show the house passed muster.

The key difference: A home inspection happens once. SOC 2 audits typically happen every year to prove you’re maintaining those security standards over time.

Who Needs SOC 2?

You probably need SOC 2 if:

• You’re a SaaS company storing customer data
• You process payments or financial information
• You handle healthcare data or other sensitive information
• You want to sell to enterprise companies
• Your customers keep asking for your “SOC 2 report”

You probably don’t need SOC 2 if:

• You’re a pure consumer app with no B2B sales
• You don’t store or process customer data
• Your customers never ask about security compliance

The short version: if enterprise companies are in your sales pipeline, they will almost certainly require SOC 2 before signing a contract.

Why SOC 2 Matters for Your Business

1. It unlocks enterprise deals. Large companies have strict vendor requirements. Without SOC 2, you won’t even get past their procurement team. With it, you’re immediately in the conversation.

2. It shortens sales cycles. Instead of filling out 50-page security questionnaires for every prospect, you hand over your SOC 2 report. It answers most of their questions in one document.

3. It actually improves your security. The audit process forces you to find and fix gaps you didn’t know existed. You come out of it with a genuinely stronger security posture.

Type 1 vs Type 2: The Quick Version

There are two types of SOC 2 reports:

Type 1 is a snapshot. An auditor checks if your security controls are properly designed on a specific date. It’s faster and cheaper, but provides less assurance.

Type 2 is a movie. An auditor watches your controls operate over 3-12 months to prove they actually work consistently. This is what most enterprise customers require.

Most companies start with Type 1 to get something quickly, then move to Type 2 for the real credibility boost. For a detailed breakdown, read our SOC 2 Type 1 vs Type 2 comparison.

The Five Trust Services Criteria

SOC 2 audits are built around five security categories called Trust Services Criteria:

1. Security (required) - protecting systems from unauthorized access
2. Availability - keeping your service running as promised
3. Processing Integrity - ensuring data is processed accurately
4. Confidentiality - protecting confidential business information
5. Privacy - handling personal data responsibly

Security is mandatory for every SOC 2 audit. The other four are optional - you pick the ones relevant to your business and customer commitments. Most companies include Security plus one or two others.

For the complete breakdown of each criterion, see our Trust Services Criteria guide.

Ready for the Complete Picture?

This was the quick intro. If you’re seriously considering SOC 2 for your company, you’ll want to understand the full process, timeline, and costs involved.

Read our comprehensive SOC 2 compliance guide for everything you need to know about getting compliant.

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