Six Reasons to Do SOC Type 1 Before Type 2

When pursuing SOC reporting, businesses often ask whether to start with a Type 1 or go straight to a Type 2. Both SOC 1 and SOC 2 frameworks offer two report types:

All businesses are looking for the most cost-effective approach. Why spend more than what’s necessary, particularly when it comes to a “compliance” activity? Many businesses see it as a “tick-the-box” where the costs, in terms of external fees and internal time investment, are best minimized.

The industry standard approach to SOC reporting is to first issue a Type 1 report to confirm the design of your control practices, followed by a Type 2 report to confirm the ongoing operating effectiveness. Most customers or end users expect the Type 2 reports to be provided on an annual basis to confirm ongoing effectiveness with continuous coverage.

The first Type 2 period usually starts from the day after the Type 1 report date. But the SOC reporting approach, dates and period(s) are flexible for the business to decide. This should be informed by the end users’ expectations and requirements.

An organization may consider skipping Type 1, but following the path from Type 1 to Type 2 provides the following advantages:

It may seem counterintuitive, but skipping the Type 1 report can cost more over time.

Consider this simplified example:

Client Y incurs more costs—plus a readiness assessment, typically over $10,000, is often needed before launching a Type 2 without a Type 1 foundation.

Type 1 reports provide a controlled environment to identify and resolve issues before the clock starts on your Type 2 reporting period.

Going straight to a Type 2 can leave you exposed. Without a Type 1, you may face gaps in documentation or audit evidence. While a readiness review can help, it’s not a substitute for a full audit and often lacks the rigor needed to instill confidence

Type 1 reports can be issued much sooner—often 3 to 6 months earlier than Type 2. Since Type 2 requires a full reporting period to pass before testing can begin, it naturally takes longer to produce.

If your customers or sales prospects request a SOC report soon, issuing a Type 1 early can satisfy their needs and keep deals moving.

The first audit always takes the most effort. Starting with a Type 1 spreads out that lift.

Type 1 audits focus on testing the design of controls, requiring fewer samples and less testing than Type 2. This gives your team time to get comfortable with the process before scaling up to a full operational audit.

Many first-time Type 2 reports cover only 3–6 months. That limited window often results in “disclosures of non-occurrence,” such as:

These aren’t audit findings, but they can reduce the perceived assurance of your report.

Starting with a Type 1 allows you to demonstrate control design upfront, then follow with a full 12-month Type 2 that shows consistent operation—without gaps.

Controls that pass a Type 1 may later need refinement in a Type 2, where auditors test for operational effectiveness. Starting with Type 1 gives you time to:

This staged approach supports maturity over time, rather than expecting perfection from day one.

We typically recommend clients start with a SOC Type 1 report before moving to Type 2. It’s a strategic way to manage costs, reduce audit friction, and build compliance readiness with confidence. That said, some organizations may still opt to go straight to Type 2 based on urgency or specific customer demands—and that’s fine, too.

Want help determining the best approach for your SOC reporting journey? Contact us. We’re here to help you get it right the first time—and add value beyond the audit.