Key takeaways:
- Start with scope. Determine which systems, services, processes, and Trust Services Criteria belong in the examination before building controls.
- Assess what already exists. Many startups already have security practices in place that can become part of their SOC 2 program.
- Document what you actually do. Policies should reflect real processes, not describe an ideal process that employees do not follow.
- Collect evidence continuously. Building evidence collection into everyday workflows can make audit preparation more manageable.
- Understand Type 1 and Type 2. Type 1 focuses on controls at a point in time, while Type 2 evaluates operating effectiveness over a defined period.
- Use the audit to strengthen operations. SOC 2 preparation can provide a structured way to formalize access management, change management, vendor risk, incident response, and business continuity.
SOC 2 is a security framework developed by AICPA that refers to controls at a service organization relevant to security, availability, integrity, confidentiality and privacy.
For startups, preparing for SOC 2 can feel like a large project, especially when the company is still building its engineering, security, HR, and IT process. The work becomes more manageable when you treat it as an operating process rather than a one-time checklist.
This guide walks through the basics of SOC 2 compliance for startups, including the Trust Services Criteria, SOC2 Type 1 vs. Type 2, audit preparation, evidence collection, and the security and operational controls startups commonly need to document.
What is SOC 2
SOC 2 refers to both the security framework and the audit that checks whether a company is compliant with SOC 2 requirements.
During a SOC 2 audit, the company needs to provide evidence for controls needed for each policy. For example, if the company has a policy for “Change Management” then it will need to provide evidence for controls like “Segregation of Environment”, “Change Notification”, “Change Documentation and Approval”.
In general Security, Policies can be grouped into the following categories
For each policy, the company will need controls like the example shown below for “Change Management Policy”:
For each control like “Segregation of Environment” in “Change Management” the company can provide evidence like:
SOC 2 vs IS0 27001
SOC 2 and ISO 27001 are both widely used approaches to demonstrating that an organization has formal information security practices, but they are not interchangeable.
SOC 2 results in an attestation report focused on controls against the Trust Services Criteria. ISO 27001 is an international standard for an information security management system (ISMS) and involves certification by an accredited certification body.
The choice for selecting the type of security certification will depend on the client. If a company has international clients, then go with ISO 27001 else for US-based clients, choose SOC 2. A company may choose to go with both, but most customers should be OK with either. ISO 27001 Certification may take more time as it has more items in scope.
Startups should ask prospective customers and partners which security reports or certifications they require during procurement.
SOC2 Type 1 vs SOC2 Type 2
If a company is doing SOC 2 certification, then you have to choose between going with Type 1 first or going directly to Type 2. Type 1 is an audit done at a particular point, like a specific day. Hence there is less evidence requested for it. Type 2 is typically an audit done over 3 to 6 months and hence it is time-bound and a lot more evidence is needed for it. If you are a vendor, most of your customers will ask for Soc 2 Type 2. If you don’t have customers asking ASAP for security compliance like Soc 2 Type 1, then go directly with Type 2. You may also consult with your auditors for deciding this.
Preparation for SOC 2
1. Select Criteria for Audit in SOC 2
When pursuing SOC 2 compliance, you can select the pillars i.e. Trust Service Criteria, that you want to get audited.
Many startups will select Security, Availability, and Confidentiality. But in specific industries, Privacy and Integrity may also be necessary.
2. Select Policy/Audit Management tool
The most popular vendor for automated SOC 2 compliance is Tugobat Logic, Vanta and SecureFrame.
These automated SOC 2 vendors will provide a template of security policies that you are expected to customize for your company. They also offer templates to provide evidence for many of the controls for your policies e.g. Risk Assessment template. Many auditors have their own tools, but they tend to be primitive. The auditors may focus on catching issues instead of focusing on supporting you by providing proper templates for your controls. Hence if you are a startup, then ensure you use vendors like Tugboat or Vaanta.
3. Select auditor
Select Auditors like Align, ssflip, etc or choose an auditor recommended by Tugboat/Vaanta.
Pro Tip: Ask the auditor on which controls or policies that they want you to focus on and any assistance they can provide before you start doing the preparation for the audit.
4. Audit Preparation
Start Preparing in advance of your start of Audit. These will be your biggest step. The auditors expect everything to be ready in advance before the Audit starts. You may also ask auditors for tips like which policies or controls they want your company to focus on. You can start putting evidence for your controls directly in Vanta/Tugboat Logic etc so that it is easy to manage it. For a typical startup, the effort to become SOC 2 compliant may roughly get divided into the below areas.
Pro Tip: For initial audit, check if your auditors will give report for a shorter audit period, so that the report can be done faster. Your all subsequent audits should be for next year.
a) Security
- Get someone, preferably external, to do Penetration Testing and audit of your data center. e.g., For the GCP audit and pen testing, we used ThreatWatch. The external penetration report is likely to be requested by your customers.
- Check if you have an IDS system. e.g., monitor network log, SQL queries, etc
- Make sure all data in transit and REST is encrypted.
- Additionally, encrypt data for sensitive items.
- Document Access Request Process in tools like JIRA
- Have an incident management plan
b) HR/IT
- During onboarding, ensure you have an offer letter signed for everyone with job responsibility
- Have a handbook signed for each employee
- Have a performance evaluation plan.
- Have Offboarding plan(remove access, return laptop) documented
- Document steps for onboarding.
- Document all job requirements and have them reviewed/approved by someone else
- Document minutes of your board meetings.
- Have your compliance do a Risk assessment for your entire company. This should cover risk due to SLA, Product, Leadership commitment, Patent etc
c) Computer Security
- Ensure you have an MDM solution like Airwatch that allows you to lock USB access, format machine, etc.
- Make sure each computer has Antivirus. If you are using a Mac or iPad they may allow an exception.
- Ensure that your email, google docs etc have DLP enabled. Having DLP will ensure that your employees are not inadvertently leaking sensitive information.
d) Vendor Management/General
- Do a risk assessment for each third-party vendor and calculate the impact of the vendor being unavailable.
- Ensure that you have a vendor management process e.g., ask your vendors for their SOC 2 reports and financial stability. You can use tools like https://panorays.com/ to collect this information.
e) Change Management
- Get approval before each deployment with systems like Jira.
- Document approval for any system or database access requests.
- Document all incidents and do a Root Cause Analysis to prevent them.
- Document your SDLC like Scrum and be prepared to show a screenshot of your Agile Board
f) Business Continuity/DR plan
- Have a Business Continuity and Disaster Recovery Plan
- Create a document on how you tested your disaster recovery.
- Appoint a manager for BCP who evaluates the main risk for BCP.
Frequently asked questions
What is SOC 2 compliance for startups?
SOC 2 compliance for startups generally refers to establishing and operating controls that can be examined against the AICPA Trust Services Criteria. The resulting SOC 2 report can provide customers and other stakeholders with information about the organization's controls.
Why do startups pursue SOC 2?
Startups may pursue SOC 2 because prospective customers, particularly enterprise and regulated organizations, may request independent information about the startup's security controls during procurement. Customer requirements vary. Startups should understand what their target customers expect before deciding on the scope and type of examination.
What are common SOC 2 controls for startups?
Common control areas include access management, change management, incident response, vendor management, data protection, employee onboarding and offboarding, security monitoring, business continuity, and disaster recovery. The controls required for a particular startup depend on its scope and selected Trust Services Criteria.
How long does SOC 2 compliance take for a startup?
There is no single timeline for SOC 2 preparation. It depends on the startup's existing security maturity, the scope of the examination, the controls that need to be implemented, and whether the company is pursuing a Type 1 or Type 2 report. Type 2 requires evidence of control operation over a defined period. It generally requires more time than a point-in-time Type 1 examination. A SOC 2 Type 1 report evaluates whether controls are suitably designed and implemented as of a specified date. A SOC 2 Type 2 report evaluates the design and operating effectiveness of controls over a specified period.
Is SOC 2 the same as ISO 27001?
No. SOC 2 and ISO 27001 are different assurance frameworks. SOC 2 results in an attestation report based on the Trust Services Criteria, while ISO 27001 is an international standard for an information security management system and can result in certification by an accredited certification body. Some organizations pursue both.
How should startups prepare for a SOC 2 audit?
Startups can begin by defining the scope, selecting the applicable Trust Services Criteria, assessing existing controls, identifying gaps, documenting policies, implementing controls, selecting a CPA firm, and establishing an evidence-collection process. Starting early gives controls time to operate before they are examined.
Build compliance into the way you operate
SOC 2 preparation does not have to be a separate process that only exists for an audit. When security controls are built into engineering, IT, HR, vendor management, and incident response workflows, the organization can continuously generate the evidence needed to demonstrate that those controls are operating.
For companies operating in financial services, that same approach can extend to broader fraud and compliance operations. Sardine helps organizations bring those workflows together across fraud prevention, AML compliance, and transaction monitoring.