SOC Reports Explained: Types, Benefits & Compliance Requirements
Introduction
In today’s digital-first business world, trust is currency. Whether you’re a cloud provider, payroll processor, or tech company managing user data, your clients need to know they can rely on your systems—especially when it comes to handling sensitive information.
That’s where SOC reports come in.
SOC reports (System and Organization Controls) are third-party audits that verify your internal controls are doing what they’re supposed to do—for security, availability, privacy, and more. They’re not just about clearing an audit; they’re about establishing long-term client trust, satisfying regulatory requirements, and staying ahead of the competition.
In this guide, we’ll break down the different types of SOC reports, who needs them, what benefits they offer, and how to meet the requirements. Whether you’re new to compliance or ready for your next audit cycle, this blog will help demystify the process.
What Are SOC Reports?
SOC refers to System and Organization Controls, a series of third-party audit reports created by the American Institute of Certified Public Accountants (AICPA). The reports serve to assess and report on the efficiency of a service organization in controlling:
Data security
Confidentiality
Availability
Processing integrity
Privacy
Financial reporting (in certain situations)
SOC reports are critical for firms that store, process, or transmit information on behalf of their customers.
Read more on Wikipedia – SOC Reports
Request A Free Quote
Why SOC Reports Matter
Consider SOC reports a seal of approval from an independent auditor. They attest to your systems and policies being reliable and compliant.
They provide assurance to your customers, investors, and partners
They enable you to differentiate in vendor selection processes
They can be utilized as part of due diligence and risk management
In most industries, they’re necessary to do business altogether
Reference: AICPA SOC Resource
Types of SOC Reports Explained
There are three primary types of SOC reports, and understanding the difference will help you select the correct one for your business model.
1. SOC 1 Report – Focus on Financial Reporting
SOC 1 reports are purely about internal controls over financial reporting (ICFR). If your services might impact a client’s financial statements, then SOC 1 is relevant to you.
Typical users: Payroll companies, billing services, accounting software companies
Two types:
Type I – Examines control design at a snapshot moment
Type II – Examines control design and effectiveness during a 6–12 month period
SOC 1 is particularly beneficial for CFOs and internal auditors on your client’s side.
2. SOC 2 Report – Security & Data Privacy Focus
SOC 2 reports are the most prevalent in the technology industry. They determine how well your company is complying with five Trust Services Criteria (TSC):
Security
Availability
Processing Integrity
Confidentiality
Privacy
You don’t have to answer all five—just those pertaining to your services.
SOC 2 reports are best suited for:
SaaS businesses
Data centers
Managed IT services
Cloud hosting services
Health tech platforms
SOC 2 Type I vs Type II:
Type I: Verifies if there are controls at some point in time
Type II: Tests if the controls operate consistently for a significant period
More information on Wikipedia – SOC 2
3. SOC 3 Report – Public-Friendly Summary
SOC 3 reports are abridged versions of SOC 2 reports. They give a general idea of your controls without revealing sensitive audit information, so they’re okay to release to the public.
Perfect for use in marketing and showing transparency.
Perfect for websites, RFPs, or sales sheets
Can’t be used in place of SOC 2 for technical review
Key Benefits of SOC Reports for Businesses
Still curious whether a SOC report is worth the trouble? Here’s why thousands of businesses now make it a priority:
Establishes Trust: Clients recognize you adhere to international best practices
Accelerates Sales: Buyers won’t hesitate onboarding because of missing audit reports
Regulatory Compliance: Assists with HIPAA, GDPR, ISO 27001, and other frameworks
Minimizes Risk: Avoids data mishandling, breaches, or inferior processes
Boosts Brand: Showing a SOC 2 badge signals credibility
SOC Report Requirements: What You’ll Need
Getting a SOC report isn’t just about hiring an auditor. Preparation is key to passing the audit successfully.
1. Internal Preparation
Review and document security, IT, and compliance policies
Map out how your systems meet each Trust Service Criteria
Train staff and ensure role-based access controls are in place
Create logs, risk assessments, backup plans, etc.
2. Work With the Right Auditor
Only registered CPA firms can provide SOC reports.
When selecting an auditor:
Choose one who is familiar with your sector
Request a readiness assessment to close gaps prior to actual audit
Define timelines and scope upfront
3. The Audit Process
Step 1: Readiness review
Step 2: Evidence gathering and testing
Step 3: Auditor findings and analysis
Step 4: Final SOC report submitted
Step 5: Remediate any issues identified
The entire process, depending on your report type, may take anywhere between 3 to 12 months.
SOC 1 vs SOC 2: Which One Do You Need?
| Feature | SOC 1 | SOC 2 |
|---|---|---|
| Main Focus | Financial reporting controls | Security & data processing controls |
| Best For | Payroll, billing, accounting | SaaS, cloud platforms, IT services |
| Clients | CFOs, auditors | Customers, InfoSec teams |
| Report Types | Type I and II | Type I and II |
Understanding Misconceptions about SOC Reports
Let’s clear some myths:
“They’re only for big enterprises.”
These also become necessary for small and medium-sized businesses to gain confidence.“One SOC report covers everything.”
Different operations may require different reports.“Type I is good enough.”
Most clients demand Type II as it indicates continuous effectiveness.“SOC 3 supplants SOC 2.”
SOC 3 is a public summary, not a replacement for SOC 2.
Maxicert Can Help You Become SOC Compliant
At Maxicert, we take businesses like yours from confusion to certification. Whether you’re beginning from scratch or struggle with a nuanced SOC 2 Type II engagement, we make it easy.
Our Services Include:
SOC readiness assessments
Policy templates and process documentation
Auditor selection and coordination
Remediation support following audits
ISO 27001 or GDPR alignment (if necessary)
Discover Maxicert’s ISO & Compliance Services
With in-depth industry experience and personalized assistance, we make compliance not only possible—but strategic.
Conclusion
In a world where data breaches and cyberattacks are growing, having the ability to demonstrate your controls via a SOC report makes you stand out. Rather than waiting for clients to ask, demonstrate that you’re already ahead of the curve. Proactive compliance isn’t only intelligent—it’s a formidable competitive advantage.
Start your SOC report journey—under the guidance of the experts.
Contact Maxicert Now to schedule your SOC readiness consultation today.
Get In Touch
Get In Touch
Get In Touch
Need A Free Estimate?
Get a free consultation and Checklist to get certified for ISO , HALAL, CE Mark Certification.
FAQ
Who needs SOC reports?
Any company that holds or processes client data on behalf of them, particularly in finance, cloud, tech, or payroll businesses.
How do SOC 2 Type I and Type II differ?
Type I audits design of controls, Type II checks that those controls function in the long term
Are SOC reports mandatory by law?
Not necessarily, but several sectors view them as mandatory for vendor onboarding or regulation.
Can I publish my SOC 2 report online?
No. SOC 2 reports are sensitive information and are reserved for certain clients only. If you desire an online version, request your auditor produce a SOC 3.
