A Complete Guide to SOC 2 Compliance for Businesses in 2025 

In cloud computing and SaaS technology, data security is no longer optional—it’s a necessity. B2B businesses regularly handle sensitive client information, including credit card numbers, emails, phone numbers, and billing addresses. Therefore, failing to secure that data can open the door to data breaches and cyber-attacks.

So, what would you do if a potential client asks about your security measures and how you protect their information?

Without a clear answer or proven security practices, you risk losing their trust and the opportunity to work with them forever.

When your data is not secured properly, cybercriminals can steal your business information through hacking, phishing, or malware attacks. This can lead to financial loss, legal problems, and a damaged reputation that’s hard to fix.

This is why SOC 2 compliance is crucial for cloud and SaaS providers. SOC 2, or Service Organization Control 2, sets standards to ensure that companies manage customer data securely.

For a SOC 2 audit, organizations are evaluated against five Trust Services Criteria (TSCs): Security, Availability, Processing Integrity, Confidentiality, and Privacy— with Security being the only mandatory criterion.

By achieving SOC-2 compliance, businesses can prove to their clients that they have strong security measures to protect their customer data. This applies to various industries, especially technology, healthcare, and finance.

What is SOC 2 Compliance?

SOC 2 compliance means following standards that help companies protect customer data and keep it safe, secure, and private. It’s verified through audits to show a company is handling information properly and securely.

The American Institute of Certified Public Accountants (AICPA) is a SOC framework governing body for Certified Public Accountants (CPAs) in the United States.

It was established in 2010 to set certain guidelines for SOC audits and reports for CPAs, ensuring reliability and consistency across various organizations.

Certified Public Accountants (CPAs) must follow standard rules when conducting SOC audits for businesses to meet the necessary criteria for data protection and maintain internal control systems. Thus, this builds trust with clients, investors, and other regulatory bodies by upholding high standards in SOC audit processes.

Who Needs SOC 2 Compliance?

SOC 2 compliance is crucial for any organization that handles sensitive or financial customer data. Some major sectors where SOC 2 compliance is required include web hosting, cloud-based services, SaaS providers, and Managed Service Providers.

These sectors are directly linked to offering cloud-based services managing critical data and client operations, making them a prime target for security breaches. SOC 2 ensures that their systems are secure, available, and confidential from vulnerabilities.

Is SOC 2 a Legal Requirement?

No, SOC 2 is not a mandatory legal requirement for all businesses. However, SOC 2 compliance may be required by certain industries or businesses that handle sensitive customer data. This includes information such as credit card details, account numbers, or other personal data businesses collect, use, or store to interact with customers.

Are SOC 2 Compliance requirements flexible?

Yes, SOC compliance requirements are flexible, meaning businesses can tailor their system controls based on their security needs while still meeting the security TSC requirements. This helps companies choose the security criteria according to their services, customer expectations, and industry standards.

The Trust Services Criteria (TSC)

There are five trust service criteria in SOC compliance: security, availability, confidentiality, processing integrity, and privacy. Businesses are evaluated for SOC 2 audits based on these security criteria defined by AICPA.

• Security: This includes security measures taken to protect the system and data from threats, vulnerabilities, and unauthorized access.
• Confidential: The information defined as confidential within the system is protected from unauthorized access.
• Processing Integrity: Ensure that system and information processing is complete, valid, accurate, timely, and authorized to meet the organization’s objectives.
• Privacy: This principle shows that the data and personal information provided are private and secure from unauthorized access, hacking, malware, and other online threats.
• Availability: The system should be accessible to authorized users only, i.e., employees or clients when needed.

What is the SOC 2 Report?

A SOC report is a document that outlines how a company manages and protects data, focusing on security TSC.

For example, a cloud storage company that stores customer data needs a SOC 2 report to validate how it protects its servers and customer data. This report helps customers and business partners understand whether the company meets the five Trust Service Criteria according to industry data security regulations.

Difference between SOC 2 Type 1 and Type 2 Report

Features	SOC 2 Type 1	SOC 2 Type 2
Purpose	Shows how security controls are designed at a specific time (e.g., today).	It shows how well those security controls perform over time.
Target Audience	Small businesses or startups who are just starting the compliance process.	Large enterprises that need ongoing, detailed assessments/reports.
Benefits	Quick reports – Save time and money.	Detailed, thorough reports. – Build credibility and trust with customers, investors, and stakeholders.
Duration	1-3 months	6 months-1 year
Cost	Cheaper and affordable	Expensive

SOC 2 Certification vs SOC 2 Compliance

There is no official SOC 2 certification. However, organizations can receive a SOC 2 attestation report verified by an independent auditor, such as a Certified Public Accountant (CPA) licensed by AICPA, to achieve SOC 2 compliance successfully.

SOC 2 compliance is demonstrated through this report, verifying if the organization has designed and implemented security controls according to the Trust Services Criteria (TSC).

What are the Benefits of SOC 2 Compliance?

Let’s now explore the benefits of SOC 2 Compliance.

Builds Trust and Credibility

Trust is the foundation of any relationship. Adhering to SOC compliance requirements builds trust among your organization’s customers, investors, business partners, and stakeholders. Thus, this proves that you take data protection seriously and follow industry regulations for handling sensitive customer data.

Additionally, continuous SOC audit improvements help organizations build credibility by adapting to new threats and compliance needs.

Prevents Data Breaches and Financial Losses

According to Statista, the average data breach cost in the United States in 2024 was $9.36 million, slightly lower than the $9.48 million in 2023.

Therefore, organizations that follow new data security practices meet compliance requirements and improve their cybersecurity. Hence, this enables them to identify threats in real time and respond immediately, reducing the high cost of data breaches.

Organizations can prevent financial and reputational damage from cyberattacks by proactively addressing security risks. This protects their valuable assets and increases customer trust.

Increase Innovation

Innovation is the core of any organization. When organizations face frequent data threats and cyberattacks, they compromise their data and reputation.

Adhering to SOC compliance helps organizations focus on improving their products or services instead of constantly addressing security incidents. Therefore, they should have a dedicated team or third-party risk management and compliance consulting provider like Ace Cloud Hosting to help them meet these data security practices.

Outsmart Competitors

When customers know you are SOC compliant, they trust that their data, such as email, phone number, and payment details, are secure. Thus, this makes them choose you over competitors who are not SOC compliant. It increases your market reputation and sets you apart from the competition.

New Business & Growth Opportunities

Many enterprise clients and B2B companies require SOC 2 compliance before signing contracts or agreements. Additionally, investors look at security and compliance practices before investing in startups.

Thus, this helps businesses and startups expand into international markets and collaborate with banks, investors, and business partners, where security standards are a priority.

Save Time and Money

SOC compliance helps businesses reduce hefty fines and penalties and avoid legal troubles related to data mishandling. Companies may lose clients or contracts that require SOC certification, especially in highly regulated industries.

Additionally, establishing clear security policies and improving internal processes reduce downtime and ensure systems run smoothly and securely.

The Role of SOC 2 in Preparing for Other Certifications

SOC compliance helps companies comply with other regulatory bodies, including HIPAA, GDPR, ISO 27001, etc.

Moreover, it shares similar requirements to ISO 27001 guidelines, including incident response planning and management and risk assessments related to data security, availability, confidentiality, and integrity. Thus, this makes getting these certifications faster than ever.

By meeting SOC 2’s standards, an organization is already on the right track for certifications. In short, SOC 2 provides a solid foundation that helps companies meet multiple regulatory requirements more efficiently.

How to Achieve SOC 2 Compliance?

• Understand Your Security Requirements: Read thoroughly about the five Trust Services Criteria (TSC) for achieving SOC compliance. Discover the data security policies relevant to your organization according to your industry standards.
• Define Your Scope: Find out the systems and processes the SOC audit will cover in your organization.
• Gap Analysis: Identify areas in your current controls that your business doesn’t follow as per TSC requirements.
• Control Implementation: Design, develop, and implement necessary security controls. This includes data policies, access controls, encryption, etc.
• Documentation: Create a comprehensive SOC report, including system controls, policies, and procedures. Validate controls through internal tests and assessments and review your controls and documentation before the final audit.
• Engage Auditor: Hire an experienced third-party AICPA-affiliated auditor for an independent assessment. They check whether your controls are properly designed and implemented in your organization. They will examine controls, conduct interviews, and review the entire documentation. Choose someone with relevant experience in your industry to conduct a thorough report.
• Report Issuance: The auditor will provide a SOC 2 report if your organization complies. It is advisable to monitor and update your controls continuously to maintain SOC compliance.

However, following these practices is just not enough. Businesses should avoid common yet significant mistakes in achieving SOC 2 compliance. These are:

• Regular Audits: Many businesses stop taking assessments after the final audit. However, conducting regular audits is necessary to maintain compliance.
• Continuous Monitoring: Monitor and test your reports continuously using various tools to automatically track security events, access logs, and system activities, as well as report security incidents and data breaches.
• Vendor Management: Organizations engage with third-party vendors for compliance monitoring. However, these vendors have access to their systems and sensitive data, making them vulnerable to threats. Therefore, businesses must monitor the vendors and ensure they comply with SOC 2 requirements.
• Security Awareness Training: If an employee’s data is breached, it can expose crucial information. This includes employee work contact information, email addresses, desk phone numbers, building locations, and more. Therefore, regular security training for employees, contractors, and stakeholders is important to protect your data from cyberattacks.
• Compliance Reviews: Update yourself with any changes in SOC 2 standards. This helps identify and respond to the latest threats immediately while maintaining compliance.

Best Practices and Tips for SOC Compliance: Follow these best practices for SOC compliance: implement strong controls, conduct regular audits, and maintain clear documentation. Keep your team informed and stay updated with compliance standards.

• Risk-based auditing: Organizations should focus on the highest security risk areas during auditing. This helps them identify vulnerabilities and threats and use resources efficiently.
• Continuous auditing: They should use technology to perform real-time audits, detect issues quickly, and improve security and compliance continuously.
• Third-party management: Assess and manage risks from vendors and partners to ensure they meet security standards and protect your data.

How often are SOC 2 audits done?

SOC 2 audits are typically conducted annually. The audit results are valid for 12 months from the issuance date. All organizations must renew the audit yearly to maintain their SOC compliance status.

However, 48% of organizations evaluate their SOC models quarterly, with others conducting evaluations more frequently for continuous compliance and security monitoring.

The Role of a SOC Analyst in the SOC 2 Compliance Process

A Security Operations Center Analyst (SOC Analyst) is a dedicated Security Operations Center (SOC) team member. These professionals are responsible for 24/7 monitoring potential threats and vulnerabilities in an organization.

They detect and analyze how the security breach occurred. Finally, they report these security incidents and collaborate with other cybersecurity teams, ensuring they do not impact the organization’s infrastructure.

SOC analysts work within a tiered framework, where Tier 1 handles initial threat detection and triage. More complex investigations and incident response tasks are escalated to Tier 2 and Tier 3 analysts, who bring deeper expertise to address advanced security issues.

Achieve SOC compliance with Ace Cloud Hosting

According to a report by Palo Alto, 52% of organizations believe that managed service providers (MSPs) deliver better security operations than their internal teams, while 49% see them as a valuable extension to enhance existing efforts.

While SOC compliance can be challenging, the benefits are well worth the effort. If your organization handles customer data, it’s crucial to evaluate the need for SOC compliance, determine the right framework, and plan the steps toward certification.

Ace Cloud Hosting is a Managed Security Service Provider (MSSP) offering expert support in governance, risk, and compliance. We can help you successfully navigate the path to SOC compliance. Book a free SOC-2 consultation today to learn how we can support your journey.