What is SOC 1 Compliance?
Service Organization Control 1 (SOC 1) is a compliance framework developed by the American Institute of Certified Public Accountants (AICPA). It ensures that SaaS platforms and marketplaces properly handle financial data, impacting their customers’ financial reporting accuracy.
If your SaaS platform processes financial transactions, payroll, billing, or accounting data, achieving SOC 1 compliance is crucial.
Who Needs to Comply with SOC 1?
SOC 1 compliance is essential for SaaS and marketplace businesses that:
✅ Process financial transactions on behalf of customers
✅ Manage sensitive accounting or payroll data
✅ Offer services that affect customers' financial reporting
💡 Example: If your SaaS platform integrates with ERP, payroll, or financial systems, SOC 1 certification builds trust with enterprise clients.
SOC 1 vs. Other Compliance Frameworks
| Compliance Standard | Purpose | Who Needs It? |
|---|---|---|
| SOC 1 | Ensures financial reporting accuracy | SaaS companies handling financial data |
| SOC 2 | Focuses on data security & privacy | SaaS companies storing customer data |
| ISO 27001 | International data security standard | Businesses handling sensitive information |
| PCI DSS | Payment security compliance | Companies processing credit card transactions |
🚀 If your SaaS platform handles financial data, SOC 1 compliance is a must!
Key SOC 1 Compliance Requirements
SOC 1 focuses on internal controls over financial reporting (ICFR). The main requirements include:
1. Risk Management & Internal Controls
✔ Implement controls to prevent errors or fraud in financial data processing
✔ Conduct regular risk assessments to identify vulnerabilities
✔ Maintain audit logs & tracking mechanisms
2. Access Control & Authentication
✔ Restrict access to financial data using role-based permissions
✔ Enforce multi-factor authentication (MFA) for all admin-level access
✔ Conduct employee training on data security best practices
3. Data Security & Encryption
✔ Use AES-256 encryption for data at rest and TLS 1.3 encryption for data in transit
✔ Secure database connections and limit third-party access
✔ Conduct penetration testing to identify vulnerabilities
4. Financial Reporting Accuracy
✔ Implement automated logging & reconciliation to detect inconsistencies
✔ Regularly audit financial statements & data processing workflows
✔ Maintain error-tracking mechanisms to flag irregularities
5. SOC 1 Type 1 vs. SOC 1 Type 2
| SOC 1 Type | Definition | Best For |
|---|---|---|
| Type 1 | Evaluates design & implementation of financial controls at a specific point in time | Startups & growing SaaS businesses |
| Type 2 | Assesses effectiveness of controls over 3-12 months | Established SaaS platforms handling high-volume financial transactions |
💡 Pro Tip: Most enterprise clients require SOC 1 Type 2 certification for long-term vendor partnerships.
Steps to Achieve SOC 1 Compliance for SaaS & Marketplaces
🔹 Step 1: Conduct a Gap Assessment
Identify areas where your financial controls need improvement.
🔹 Step 2: Implement Internal Controls
Establish security measures, data tracking, and financial reporting accuracy mechanisms.
🔹 Step 3: Perform a Readiness Assessment
Work with SOC 1 auditors to test your system’s compliance readiness.
🔹 Step 4: Undergo a SOC 1 Audit
Hire a certified CPA firm to conduct your SOC 1 Type 1 or Type 2 audit.
🔹 Step 5: Maintain Compliance & Continuous Monitoring
Regularly update security controls, conduct audits, and ensure ongoing SOC 1 compliance.
Top SOC 1 Compliance Platforms for SaaS & Marketplaces
To simplify the compliance process, use SOC 1 compliance automation tools:
| Platform | Key Features | Website |
|---|---|---|
| Vanta | Automates SOC 1 compliance tracking & audit readiness | vanta.com |
| Drata | Continuous monitoring & security automation for SOC 1 audits | drata.com |
| Secureframe | End-to-end SOC 1 compliance automation for SaaS | secureframe.com |
| Strike Graph | AI-powered compliance risk assessment & reporting | strikegraph.com |
| AuditBoard | Enterprise-grade risk & compliance management for SOC 1 | auditboard.com |
💡 These platforms help automate SOC 1 readiness, reduce manual work, and streamline compliance reporting.
SOC 1 Audit Costs: What to Expect?
| SOC 1 Audit Type | Estimated Cost |
|---|---|
| SOC 1 Type 1 | $20,000 – $40,000 |
| SOC 1 Type 2 | $50,000 – $100,000+ |
| SOC 1 Compliance Software | $5,000 – $20,000 per year |
💡 Pro Tip: Start with a SOC 1 Type 1 audit before transitioning to SOC 1 Type 2 for long-term compliance.
Why SOC 1 Compliance Matters for SaaS & Marketplaces
✅ Builds trust with enterprise clients & financial institutions
✅ Reduces legal risks associated with financial reporting errors
✅ Enhances data security and protects sensitive financial transactions
✅ Provides a competitive advantage in regulated industries
🚀 Want to get SOC 1 certified? Contact us for expert guidance and compliance solutions!
Contact Us
For any SOC-1 related inquiries, please contact our Data Protection Officer (DPO):
Email: hello@xamta.in