Skip SOC 2 Type 1: Here's Why You Should Go Straight to Type 2

For most startups, yes. A Type 1 only shows your controls were designed well on one day, and enterprise buyers want a Type 2. Start a security-only Type 2 observation window and ask your CPA firm for a letter confirming you are mid-audit. A Type 1 is the option when a prospect needs a report in under about 3 months.

Key takeaways

• Type 1 proves control design on a single day; Type 2 proves controls operated over time, which is what buyers ask for.
• Doing Type 1 and then Type 2 meant paying for two audits: $50-55K in our quotes versus $35K for Type 2 alone.
• A CPA firm's attestation letter, available once your observation period starts, unblocked our deals at no extra cost.
• Findings are not fatal: each one gets a management response, and buyers read both.
• Put the money and time into readiness work before the observation period starts.

I wasted months worrying about whether we should do a SOC 2 Type 1 before committing to Type 2. Every consultant and auditor made it sound like Type 1 was the "safe" path: a dry run that would catch our gaps before the real audit period began.

This is the story of that decision, from a prior company I led before founding SimpleAudit.

Then a prospect asked for proof we were getting our SOC 2 report, and everything clicked.

We weren't even done with our three-month audit period yet. But when we asked our CPA firm for documentation, they immediately sent over a signed letter of attestation confirming we were mid-audit with specific start and end dates. That letter unblocked the deal instantly. The prospect wasn't impressed because we had policies documented (which is basically all Type 1 proves). They were impressed because we were confident enough in our security posture to enter an observation period where every control failure would be documented.

That's when I realized:

Type 1 is an expensive solution to the wrong problem.

For a deeper dive on what each audit type actually covers, see our full Type 1 vs Type 2 comparison.

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Read the transcript

Every founder knows this moment. Getting SOC 2 ready can take months to figure out, and the cost of getting help makes it even harder. Most founders don't know where to begin. SimpleAudit starts with a conversation, plain language, no jargon. From one conversation, your entire workspace is built, personalized to your stack, built for founders, clear next steps every time. Policies are drafted automatically, based on your answers. Refine any policy with AI suggestions that highlight what matters. Every module comes with built-in guidance. Vendors, risks, access reviews, handled with AI that knows your setup. Your SOC 2 readiness updates in real time. Clear progress, no guesswork. Review security assessments, store evidence, and stay organized, all in one place. Complete your business impact analysis with guided step-by-step prompts. Most startups spend up to $20,000 on software and consultants just to get ready. SimpleAudit starts at $199 a month. Right-sized SOC 2 for startups. You're closer than you think. Start your free trial. No credit card. No setup. SimpleAudit.io.

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The Math Doesn't Add Up

Let's talk numbers, because the financial case against Type 1 is damning.

Our SOC 2 Type 2 audit with a three-month observation period cost $35K for security-only TSC, a larger firm, at our headcount. (Today a lean security-only Type 2 with a peer-reviewed boutique auditor runs $5-8K, which makes the case against Type 1 even more damning; the comparison below uses our real numbers.) That's the real report that actually satisfies enterprise buyers.

A Type 1 audit? Auditors were quoting $15-20K. And here's the kicker: if you do Type 1 first and then Type 2 later, you're paying for both audits separately. You might get a 1-5% courtesy discount if you're lucky, but essentially you're looking at $50-55K total vs. $35K for just doing Type 2 right.

You're spending an extra $15-20K to tell prospects "we have security policies written down", which they already assume you do. Because the real question enterprises ask isn't "do you have policies?" It's "can you prove you actually follow them over time?" Type 1 doesn't answer that question. Type 2 does.

	SOC 2 Type 1	SOC 2 Type 2
What it proves	Controls were designed well on one day	Controls operated across the observation period
Our security-only quotes	$15-20K	$35K at our headcount; $5-8K lean today
What a prospect sees while you wait	Nothing until the report	An attestation letter from the day the period starts
After the period ends	Not applicable	6-8 weeks to the draft report
Doing both	$50-55K for two audits	$35K for one

The Attestation Letter Hack Nobody Talks About

Here's what changed my entire perspective on the Type 1 vs. Type 2 question: the moment a client asked if we could prove we were in an audit period.

I hadn't even considered this scenario. We were two months into our three-month observation period, and a healthcare prospect needed documentation for their vendor risk management team. (Health-system buyers have specific procurement patterns that make this tactic especially effective. See SOC 2 for healthtech companies for the full dynamic.) I asked our auditor somewhat nervously if they could provide anything, half-expecting bureaucratic resistance.

They sent the attestation letter within an hour.

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It was a formal document on CPA firm letterhead stating that we were actively undergoing a SOC 2 Type 2 audit from [start date] to [end date]. No findings, no gaps analysis, no detailed control documentation. Just proof that we'd committed to the process and a professional auditor was watching.

That letter closed the deal. And every subsequent prospect who asked accepted it without hesitation.

Think about what that letter actually signals: "Our security controls are tight enough that we're willing to have a CPA firm observe everything we do for three months and document any failures." That's a far stronger statement than "We hired consultants to write policies and an auditor checked that we have them."

The beautiful part? The attestation letter costs you nothing. It's included when you engage a CPA firm for Type 2. You get this sales tool the moment your observation period starts, which means you're unblocking deals months before your actual SOC 2 report is ready.

Why "Findings" Aren't Scary

The most common objection I hear to skipping Type 1 is: "But what if we have control gaps we don't know about? Type 1 will catch them before they count against us in Type 2."

This assumes findings are fatal. They're not.

We had one finding in our final report. Something about remote computers that didn't quite meet our documented standard. Did it tank our report? No. Did prospects reject our report because of it? Also no.

Here's what actually happens when an auditor identifies a gap: it goes in your report as a finding, and you provide a management response explaining what you're doing about it. That's it. The report (findings and all) is what you share with clients under NDA. They read your findings, they read your responses, and they make their own risk assessment.

Many times, they determine the findings are acceptable risks. Or they appreciate that you're transparent about gaps and have a remediation plan. The idea that a finding disqualifies you is a myth perpetuated by people selling you gap assessments and Type 1 audits.

And here's the timeline detail nobody mentions: after your observation period ends, it typically takes 6-8 weeks before you receive the draft report and can provide management responses. By then, you've often already solved the problem that caused the finding. Your management response becomes "We identified this gap during the audit period and have since implemented X, Y, and Z." Clients actually respect that more than a spotless report, because it shows you take findings seriously and move quickly.

The Real Risk Mitigation: Readiness Work

So if Type 1 isn't the safety net, what is?

Proper readiness work before you start your Type 2 observation period.

We spent about four months getting audit-ready before beginning our three-month Type 2 observation period. We brought in a vCISO for part of that process, though we did most of it ourselves. (This is exactly why I built SimpleAudit: to be that guide for other technical founders without the consulting markup.)

The readiness phase is where you identify your gaps and fix them. You document your controls. You implement the technical infrastructure. You start the organizational change process that takes way longer than anyone expects.

For us, the people side was brutal. We needed to convert remote workers' computers to Intune-managed devices using their Microsoft 365 accounts. Only about 30% converted smoothly. The other 70% required painful, one-at-a-time manual troubleshooting with non-technical users. But we needed that visibility and control over remote hardware to meet our security requirements.

That work doesn't happen during a Type 1 audit. Type 1 is a point-in-time snapshot that says "on this day, these controls existed." It doesn't help you build the controls. It doesn't help you train your team. It doesn't help you debug the messy reality of infrastructure spread across cloud providers, physical offices, and remote employees on inconsistently configured hardware.

A proper readiness phase does all of that. And once you've done that work, Type 1 becomes redundant. You already know your controls are solid. You're ready for the observation period. Why pay $15-20K to have an auditor confirm you did your homework?

How to Spot (and Shut Down) the Upsell

Let's be direct: an auditor or consultant pushing Type 1 is trying to upsell you. There's little risk in skipping it.

When someone tells you "you should really do Type 1 first to be safe," here's what you ask them:

"What specific risks does Type 1 mitigate that proper readiness work doesn't?"

They won't have a good answer. Because the answer is: none. Type 1 identifies gaps. So does a gap analysis. So does working with a vCISO during your readiness phase. So does using a tool like SimpleAudit to guide you through control implementation and ensure you're maintaining the cadence you declared in your policies.

If you really want external validation before committing to Type 2, ask about a gap analysis instead. It's typically a bit cheaper than Type 1 and gives you the same information: a list of what needs fixing before you're audit-ready. But honestly, the gap is almost always the same handful of items. You don't need to pay $10-15K to find out.

The SOC 2 framework isn't a secret. The Trust Services Criteria are publicly documented. You know what controls you need. You know what evidence auditors will ask for. The question isn't "what are the requirements?" It's "are we actually doing this stuff consistently?"

And that's exactly what Type 2 tests. Not whether you have policies, but whether you follow them. Which is why you should skip straight to the audit that matters and save yourself $15-20K in the process.

What You Actually Need

Here's my advice after going through this process and building a company around making it easier for others:

Start your employee-facing policy changes immediately. Don't wait until you've perfected your technical controls. The hard part isn't configuring your cloud infrastructure. That's just time and focus. The hard part is organizational change. Getting non-technical remote employees to adopt new security practices. Building a culture where people follow incident response procedures instead of just Slacking someone "hey is the app down?"

Budget realistically for the full cost. Our Type 2 audit was $35K, but that doesn't include third-party penetration testing (typically $7-10K annually) and incident response testing (another $8-10K). Most auditors expect both. Budget $50-60K total for your first year, not just the audit fee. (And note that the platform you pick is not the biggest line item. See why enterprise GRC platforms are overkill for seed-stage startups for the actual cost breakdown.)

Focus on the cadence, not the documentation. Once you declare quarterly access reviews or monthly policy reviews or annual vendor risk assessments in your policies, the real challenge is maintaining that cadence. You need a system that reminds you when these things are due and keeps evidence organized so nothing falls through the cracks. This is what startups actually struggle with, not whether their firewall is configured correctly.

Request that attestation letter early. The moment your observation period starts, ask your auditor for a letter stating you're in an active SOC 2 audit. Use it to unblock deals while you wait for the final report. It's more valuable than a Type 1 and costs you nothing.

And skip Type 1. Seriously. Put that $15-20K toward actually improving your security posture instead of paying for a report nobody finds satisfying anyway.

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Written by Joe, who led SOC 2 at a prior company before founding SimpleAudit, the AI-guided compliance platform built for founders and owners who don't have a CTO hat to wear.