Framework Selection · SSAE 18 · Trust Services Criteria

SOC 1 vs SOC 2 (2026): Which Report Do You Actually Need?

SOC 1 VS SOC 2

The two get confused constantly. They report on completely different things — here's how to know which one your customers are actually asking for.

Quick Answer

SOC 1 reports on controls that affect your customers' financial reporting — it exists for services like payroll, billing, and payments that touch numbers on someone else's financial statements. SOC 2 reports on controls for security and data protection — the Trust Services Criteria. If you're a SaaS or tech company and a prospect asks for "your SOC report," they almost always mean SOC 2. You only need SOC 1 if your service affects your customers' books.

Head-to-head comparison

Dimension	SOC 1	SOC 2
What it reports on	Controls relevant to your customers' internal control over financial reporting (ICFR)	Controls relevant to security, availability, processing integrity, confidentiality, privacy
The short version	About money — could your service mis-state a customer's financials?	About data — do you protect the information customers trust you with?
Who typically needs it	Payroll processors, billing/payments platforms, loan servicers, claims processors, fund administrators	SaaS, cloud, MSPs, data processors — almost any tech vendor handling customer data
Who asks for it	Your customers' auditors and CFO/controller teams	Your customers' security, IT, and procurement teams (vendor risk review)
Standard / criteria	SSAE 18 (AT-C 320); control objectives you define around financial reporting	SSAE 18 (AT-C 205) mapped to the AICPA Trust Services Criteria
Who performs it	A licensed CPA firm	A licensed CPA firm
Type 1 vs Type 2	Both exist — Type 1 point-in-time, Type 2 over a period (usually 3–12 months)	Both exist — Type 1 point-in-time, Type 2 over a period (usually 3–12 months)
Public or private?	Restricted-use report — shared under NDA with customers and their auditors	Restricted-use report — shared under NDA during vendor review
Most common for SaaS?	No — only if you touch customer financial reporting	Yes — the default ask for technology vendors

Not sure which your buyers want? The fastest answer is to ask their security/procurement team directly — they will tell you, and it is almost always SOC 2. Text PJ for a gut-check on your exact situation.

The honest verdict

The confusion is understandable — both are "SOC reports," both come from a CPA firm, both have Type 1 and Type 2 versions, both run under SSAE 18. But they answer opposite questions. SOC 1 answers: "Could this vendor's processing throw off the numbers on my financial statements?" SOC 2 answers: "Could this vendor leak, lose, or mishandle the data I'm trusting them with?" Pick based on which question your customers are actually asking.

For the overwhelming majority of software and technology companies, the answer is SOC 2. When a prospect's vendor-security questionnaire says "please provide your SOC report," they mean SOC 2 — they want assurance you protect their data. SOC 1 only enters the picture when your service is woven into your customers' financial reporting: you run their payroll, you process their payments, you service their loans, you administer their funds. If that's you, your customers' auditors will be the ones asking, and they'll say SOC 1 explicitly.

My operator take: don't build a SOC 1 because it sounds adjacent — build the report your revenue is actually waiting on. If you're a normal SaaS company, do SOC 2 and ignore SOC 1 until a financial-reporting customer specifically demands it. If you genuinely need both (common for payments and payroll platforms), you can run them with the same CPA firm in one fieldwork window and reuse a lot of the same control evidence. Before you spend a dollar, see SOC 2 vs ISO 27001 if you also sell internationally, and SOC 2 Type 1 vs Type 2 to pick the right flavor.

Best for — pick your scenario

Choose SOC 2

Standard SaaS handling customer data

You store, process, or transmit your customers' data. Buyers want assurance you protect it. SOC 2 is the report their security team is asking for — this is the default.

Choose SOC 2

Deals stalling in vendor-security review

Enterprise procurement keeps requesting "your SOC report" to clear the vendor risk gate. That's SOC 2 — get a Type 1 fast to unblock, then a Type 2 for the durable proof.

Choose SOC 1

Your service touches customer financials

Payroll, billing, payments, loan servicing, claims, fund administration. Your customers' auditors need assurance your controls don't mis-state their financial statements — that's SOC 1.

Choose SOC 1

Customer auditors are the ones asking

If the request is coming from a CFO, controller, or external financial auditor — not the security team — they want SOC 1. They're testing your impact on their books.

You may need both

Payments/payroll platform serving enterprises

You touch customer financials and hold sensitive data. Many such platforms carry both reports. Run them with one CPA firm in a shared window and reuse common control evidence.

Confirm before you build

Not sure which your buyers want

Don't guess. Ask two or three prospects' security/procurement teams which report they require. They'll tell you in one email — and it's almost always SOC 2.

Not sure which SOC report your buyers actually want?

Text PJ — a real human, honest answer, no sales pitch. Tell me what your product does and who's asking, and I'll tell you straight whether it's SOC 1, SOC 2, or both — and roughly what each will cost.

Text PJ for the honest read · 858-461-8054

Frequently asked questions

What is the difference between SOC 1 and SOC 2?

SOC 1 reports on controls at a service organization that are relevant to its customers' internal control over financial reporting (ICFR) — it exists because your service could affect numbers on your customers' financial statements. SOC 2 reports on controls relevant to security, availability, processing integrity, confidentiality, and privacy — the Trust Services Criteria. Put simply: SOC 1 is about money and financial-statement accuracy; SOC 2 is about data protection and security. Both come in Type 1 (point-in-time) and Type 2 (over a period) flavors and both are performed by a CPA firm under SSAE 18.

Do I need SOC 1 or SOC 2?

Most SaaS and technology companies need SOC 2 — buyers ask for it to vouch that you protect their data. You need SOC 1 only if your service affects your customers' financial reporting: payroll processors, billing and payments platforms, loan servicers, claims processors, and similar. Some companies that touch financials need both. The fastest way to know: ask your prospects' security and procurement teams which report they require in their vendor review — they will tell you, and it is almost always SOC 2.

Is SOC 2 harder than SOC 1?

Not inherently harder — they test different things. SOC 1 control objectives are defined by you and centered on financial-reporting accuracy, so the scope is often narrower but very specific to your processing. SOC 2 maps to the standardized Trust Services Criteria with a broad security baseline (access control, change management, monitoring, incident response, vendor management). For most software teams SOC 2 feels broader because it touches the whole security program, while SOC 1 feels deeper but narrower on financial-transaction controls.

Can one audit cover both SOC 1 and SOC 2?

They are separate reports with separate scopes and separate opinions, but the same CPA firm can perform both, often in the same engagement window, and you will reuse a lot of the same underlying control evidence (access, change management, monitoring). If you genuinely need both — common for payments and payroll platforms — tell your auditor up front so they can plan a combined fieldwork window and avoid duplicate evidence requests.

Which comes first if I need both SOC 1 and SOC 2?

Lead with whichever your customers are actually blocking deals on — that is almost always SOC 2 for a technology vendor. If financial-reporting customers are demanding SOC 1, prioritize that. In practice many teams do SOC 2 first because it builds the broad security control baseline, then add SOC 1 to cover the financial-reporting controls for the subset of customers who require it. Don't build both at once unless real revenue is waiting on both.