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A Simple Breakdown: SOC 1 vs. SOC 2 vs. SOC 3

March 15, 2022

When you start seeing requests for acronyms like SOC, ISO, or PCI DSS, it’s easy to be taken aback and intimidated. In reality, these reports are fairly straightforward, and when properly understood, they can open lucrative doors for your organization. 


But how do you know which reports you need? Let’s start by breaking down the difference between SOC 1 vs. SOC 2 vs. SOC 3.

The purpose of SOC reports

SOC 1, SOC 2, and SOC 3 reports have distinctive differences, but at their core, they have a common purpose: to attest to your organization’s ability to protect your clients’ needs. 


When your client requests a SOC report, it’s a way for them to assess and mitigate the risks of doing business with you. In many cases, a client or business partner might walk away from the deal if you can’t provide a satisfactory report.

SOC 1 vs. SOC 2 vs. SOC 3: What’s the difference?

SOC reports serve as documented reassurance. They show your company’s ability to protect clients’ needs, and those “needs” are not always the same. 


A SOC 1 report is all about finances. It examines and details the controls you have in place over your financial reporting and operations. This can be critical for your clients because, depending on the services you provide, a failure to conduct financial operations responsibly could put their financial statements, reporting, and integrity at risk.


A SOC 2 report is concerned with the way you handle customer data. That includes the security, confidentiality, processing integrity, privacy, and availability of customer data. Think of your SOC 2 report as an in-depth demonstration of how you protect customer data that comes through your system. Keep in mind this may include your customer’s customer data.


A SOC 3 report covers the same information as a SOC 2 report, but is less complex. It’s usually designed for the general public. You might want to produce a SOC 3 report for internal purposes, such as marketing your data security or reassuring your shareholders.


Which SOC report do you need?

Between SOC 1 and SOC 2, it’s a matter of the service your business provides. If your service could affect your clients’ financial statements in any way—such as processing their payroll—SOC 1 will be critical. If you’re handling other types of sensitive information, like user actions or proprietary data, you’ll likely need a SOC 2 as your company grows.


A SOC 3 report is more situational and isn’t often requested by a potential customer. It’s meant for an organization that handles customer data and wants to increase public awareness of how you handle that data.

Is one SOC report better than the others?

There’s a common misconception that the numerical value of each SOC report signifies the amount of detail found within. Each type of report merely has its own purposes without one being better than the others.

When do I need a SOC report?

You’ll eventually need some type of SOC report to prove your security posture to investors and potential customers. How do you know when you need a certain type of SOC report? For SOC 1 and SOC 2, a client or partner will specifically ask for the type of report they want as they consider doing business with you. Because SOC 3 is used for general purposes, you’ll likely find a need for SOC 1 and SOC 2 first.


So, should you just ignore the idea of a SOC report until someone asks for one? That isn’t advisable. Any type of SOC report will require an external auditor to come in and do a comprehensive audit. It can take weeks or months to upgrade and prepare your controls before you’re even ready for the audit to begin. 


If you have a potential deal in the works with a new client, you’ll probably need to put it on hold until you receive your SOC report. This can derail a business deal and slow further sales opportunities.

Preparing for your SOC 1, 2, or 3 report 

The first step for any SOC report is to take an in-depth look at your controls and see where you’re using up-to-date best practices and where you could be putting efforts more efficiently.


In the case of a SOC 2 report, Vanta’s SOC 2 automated compliance software is great place to start. This tool guides you through defining the scope of your SOC 2 report, conducting a readiness assessment, and providing you with helpful guides and templates so you can prepare more efficiently.