February 3rd, 2020
Subscribe to our blog and stay up to date
What is SOC 2 Compliance?
SOC 2 is one of the more common frameworks that technology companies follow. Although larger enterprises have long made SOC 2 a component of their compliance measures, this practice is being increasingly taken up by SMBs and startups as well.
SOC 2 is a compliance framework around data privacy and security developed by the American Institute of CPAs (AICPA). Specifically, SOC 2 sets guidelines for organizations that store data in the cloud. This means that SOC 2 is applicable to most SaaS businesses, even startups and SMBs.
Unlike GDPR or HIPAA, SOC 2 is not a law. However, because it is a standard that has been adopted by companies around the world, SOC 2 compliance can be a gauge of how seriously a company takes their privacy and security protocols.
There are five principles of SOC 2 compliance known as the Trust Services Criteria (TSC). We’ll explain each one below:
SOC 2 compliance requires an audit process that must be conducted by a licensed CPA audit firm. There are two types of SOC 2 compliance that you’ll need to choose from. We’ll explain both below.
SOC 2 Type 1
A Type 1 audit examines a company’s adherence to the Trust Services Criteria at a single point in time. It’s a way of saying, “On [fill in date here] XYZ company had all of the proper security controls in place.”
SOC 2 Type 2
A Type 2 examination takes place over a longer period of time—usually six months. You will need to keep detailed records on how your security controls were operated and maintained over the entire period of time. Security experts generally recommend that companies choose Type 2 compliance because of its long-term benefit. It suggests that you see security as an ongoing process rather than a one-and-done or aspirational goal.
It instills good habits
Whether or not your organization chooses to go through an entire SOC 2 audit, adhering to the TSC, will make your company safer. Small businesses are often the target of cyberattacks, so it seems wise to follow established protocols used by many large organizations.
It opens more opportunities
If you are pursuing vendor contracts with the government or large enterprises, it’s likely that you’ll need to prove how you’re taking measures to protect data. SOC 2 compliance is a standard way of showing that you have already done the work.
It’s easier to do as an SMB
Implementing new security protocols is much easier when you’re a small business. If you develop a security culture based on SOC 2 compliance early, you can scale it as your company grows.
We know that navigating the world of compliance can be a heavy lift for many SMBs and startups. Electric works with businesses to develop, document, and maintain compliance with common regulatory frameworks including SOC 2.