Which Compliance Framework Do You Need? A Guide by Business Type

Why Choosing the Right Framework Matters (And Costs Less)

You just landed a meeting with your dream enterprise customer. The demo went perfectly, the champion is excited, and procurement sends over the security questionnaire. Then you see it: "Please provide your SOC 2 Type II report."

Your heart sinks. You've heard of SOC 2, maybe GDPR too, but you're not entirely sure which frameworks actually apply to your business. Should you pursue all of them? Just one? And what about HIPAA—does that matter if you're not technically a "healthcare company"?

This confusion costs startups real money and real deals. We've seen founders spend $50,000 pursuing the wrong certification, only to discover their enterprise prospects actually needed something different. Others delay compliance entirely out of analysis paralysis, watching competitors close deals they should have won.

Compliance isn't a one-size-fits-all proposition. A B2B SaaS company selling to US enterprises has fundamentally different requirements than a healthcare app serving European patients. Yet many founders approach compliance like a checklist, pursuing frameworks based on what they've heard is "standard" rather than what their specific situation demands.

The good news? Most early-stage companies need one or two frameworks to start, not five. By understanding which factors determine your requirements, you can prioritize the certification that will close deals faster while planning a realistic roadmap for additional frameworks as you grow.

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The 6 Factors That Determine Your Compliance Requirements

Before diving into specific frameworks, let's establish the decision criteria. These six factors will determine approximately 90% of your compliance requirements. As you read through each one, note which attributes apply to your business.

1. Business Type (SaaS, Fintech, Healthcare, E-commerce, Marketplace)

Your fundamental business model shapes your baseline compliance needs. Each business type carries inherent data handling patterns and risk profiles that regulators and customers care about.

• SaaS companies typically need to demonstrate they can securely handle customer data at rest and in transit. This usually means SOC 2 as a starting point, with additional frameworks layered based on the data types involved.
• Fintech companies face a more complex landscape. Beyond general security frameworks, you're likely looking at financial services regulations, potentially PCI DSS if you touch payment card data, and state-by-state money transmitter requirements.
• Healthcare technology companies almost always need HIPAA compliance if they handle any patient information—even if they consider themselves a "tech company that happens to serve healthcare."
• E-commerce and marketplace businesses typically need PCI DSS compliance for payment processing, plus GDPR if serving European customers. The specific requirements depend heavily on whether you process payments directly or use a third-party processor.

2. Target Customers (B2B vs B2C, Enterprise vs SMB, Government)

Who writes your checks matters enormously for compliance prioritization.

• Enterprise B2B customers (companies with 500+ employees) almost universally require SOC 2 Type II reports before signing contracts. This isn't optional—it's a procurement checkbox.
• SMB customers are generally less demanding about formal certifications, though this is changing. Many SMBs now ask for SOC 2 reports, especially if they're handling sensitive data themselves.
• B2C customers rarely ask about your SOC 2 status, but regulators do care about how you protect consumer data. GDPR, CCPA, and other privacy regulations become more relevant here.
• Government customers have their own framework requirements, including FedRAMP for US federal agencies and StateRAMP for state-level contracts.

3. Industry Sector and Regulatory Environment

Some industries have mandatory compliance requirements regardless of your business model. Financial services companies must comply with regulations like GLBA, SOX (if publicly traded), and various state and federal banking regulations. Healthcare organizations face HIPAA requirements. Companies handling children's data must comply with COPPA.

These aren't optional frameworks you choose—they're legal requirements based on your industry classification. If you're uncertain whether your business falls under specific industry regulations, consult with a compliance attorney before making framework decisions.

4. Geographic Markets and Countries of Operation

Where your customers are located—not where your company is headquartered—determines many of your compliance obligations.

• European Union presence triggers GDPR requirements. This applies if you have EU customers, EU employees, or process data about EU residents—even if your company is based in the United States.
• United States operations may trigger state-specific privacy laws like CCPA (California), VCDPA (Virginia), or CPA (Colorado). These requirements are expanding rapidly.
• Global operations require careful analysis of data transfer mechanisms, local data residency requirements, and country-specific regulations.

5. Data Sensitivity (Personal, Health, Financial, Payment Data)

The types of data you collect, process, and store directly determine your framework requirements.

• Personal data (names, emails, addresses): GDPR, CCPA, and general privacy frameworks
• Protected health information (PHI): HIPAA compliance required
• Payment card data: PCI DSS compliance required
• Financial data: Various financial regulations depending on data type
• Children's data: COPPA compliance required

Many companies underestimate their data sensitivity. If your SaaS product integrates with a customer's HR system, you might be processing health insurance information—making HIPAA relevant even though you're not a "healthcare company."

6. Business Model and Revenue Streams

How you make money affects your compliance profile in subtle but important ways.

• Subscription SaaS models with recurring revenue typically face standard B2B compliance requirements centered on SOC 2 and data protection.
• Advertising-supported models that monetize user data face heightened privacy scrutiny and may need to demonstrate compliance with consent requirements under GDPR and similar regulations.
• Marketplace models where you facilitate transactions between parties may have PCI DSS obligations depending on your role in payment processing.
• API-first businesses that other companies build upon often face elevated security requirements, as your security posture directly affects your customers' compliance status.

When You Need SOC 2 (B2B SaaS Selling to Enterprise)

SOC 2 is the de facto standard for B2B software companies selling to other businesses. You likely need SOC 2 if:

• You sell software or services to other businesses
• Your customers are mid-market or enterprise companies
• You handle, process, or store customer data
• You're receiving security questionnaires from prospects
• Enterprise deals are stalling in procurement

SOC 2 comes in two types. Type I is a point-in-time assessment that can be completed in weeks. Type II covers a review period (typically 3-12 months) and carries more weight with enterprise buyers.

Priority level: If enterprise B2B sales are your primary growth channel, SOC 2 should likely be your first compliance investment. Most enterprise procurement teams won't proceed without it.

When You Need HIPAA (Healthcare Data and PHI)

HIPAA applies more broadly than many founders realize. You need HIPAA compliance if you:

• Directly provide healthcare services
• Process, store, or transmit protected health information (PHI)
• Provide services to healthcare providers, health plans, or healthcare clearinghouses
• Build software used by healthcare organizations that involves patient data
• Integrate with EHR systems or health-related APIs

The key question: Does your product touch any information that could identify a patient and relate to their health status, healthcare provision, or payment for healthcare?

Many "non-healthcare" companies discover they need HIPAA compliance. A scheduling app for medical practices handles PHI. A billing platform for therapists handles PHI. An analytics tool processing insurance claims handles PHI.

Priority level: If you handle PHI, HIPAA isn't optional—it's a legal requirement. Violations can result in fines up to $1.5 million per incident category per year, plus potential criminal penalties.

When You Need PCI DSS (Processing Payments)

PCI DSS applies if you store, process, or transmit payment card data. The level of compliance required depends on your transaction volume and role in the payment ecosystem.

You likely need PCI DSS compliance if you:

• Accept credit card payments directly
• Store credit card numbers (even encrypted)
• Process payments on behalf of others
• Build software that handles payment card data

However, many companies can significantly reduce their PCI DSS scope by using payment processors like Stripe or Braintree that handle card data on your behalf. If you never see or store actual card numbers, your PCI DSS requirements may be minimal.

Priority level: If you directly handle payment card data, PCI DSS is mandatory. If you use third-party payment processors, verify your scope before investing in full PCI DSS compliance.

When You Need Multiple Frameworks (And How to Prioritize)

Most growing companies eventually need multiple frameworks. The question is sequencing.

Prioritize based on revenue impact. Which framework is blocking deals today? If you're losing enterprise contracts due to missing SOC 2 reports, that's your first priority—even if you also need GDPR eventually.

Consider framework overlap. SOC 2 and GDPR share significant common ground around data protection practices. Implementing one makes the second easier. Similarly, HIPAA and SOC 2 have overlapping security requirements.

Build a realistic timeline. Don't try to achieve three frameworks simultaneously. Plan a 12-18 month roadmap:

• Months 1-6: Primary framework (likely SOC 2 for B2B SaaS)
• Months 6-12: Second framework (GDPR or HIPAA based on business needs)
• Months 12-18: Additional frameworks as needed

This sequenced approach lets you build compliance infrastructure incrementally rather than overwhelming your team.

Real-World Examples: 5 Startup Profiles and Their Framework Requirements

Let's apply this framework to realistic startup scenarios.

Profile 1: B2B Project Management SaaS

Series A, US-based, selling to US enterprises

→ Primary framework needed: SOC 2 Type II
→ Secondary consideration: CCPA compliance for California customers
→ Timeline priority: SOC 2 first, as it's blocking enterprise deals

Profile 2: HR Tech Platform

Seed stage, serving US and EU customers

→ Primary frameworks needed: SOC 2 (for enterprise sales) + GDPR (EU customers)
→ Additional consideration: May need HIPAA if platform handles benefits/health insurance data
→ Timeline priority: SOC 2 and GDPR simultaneously, as both are blocking revenue

Profile 3: Telehealth Startup

Series A, US patients and providers

→ Primary framework needed: HIPAA (mandatory for PHI)
→ Secondary framework: SOC 2 (for selling to healthcare enterprises)
→ Timeline priority: HIPAA first (legal requirement), SOC 2 within 6 months

Profile 4: E-commerce Platform

Series B, global marketplace

→ Primary frameworks needed: PCI DSS (payments) + GDPR (EU customers)
→ Secondary consideration: SOC 2 if selling B2B merchant services
→ Timeline priority: PCI DSS and GDPR based on revenue split between regions

Profile 5: Developer Tools Company

Seed stage, API-first, global customers

→ Primary framework needed: SOC 2 Type II (B2B enterprise sales)
→ Secondary frameworks: GDPR (EU developers), potentially HIPAA (healthcare customers)
→ Timeline priority: SOC 2 first, expand based on customer segment growth

How to Validate Your Framework Requirements Before Investing

Before committing budget to any compliance initiative, validate your assumptions through these steps.

1. Audit your actual data flows

Map exactly what data you collect, where it's stored, how it's processed, and who can access it. Many founders discover they're handling more sensitive data than they realized—or less.

2. Review your sales pipeline

Look at the last 10 enterprise deals you pursued. What security requirements came up? Which deals stalled due to compliance gaps? This tells you what the market actually demands.

3. Survey your existing customers

Ask your current customers what compliance requirements they face and what they need from vendors. Their answers reveal your true compliance priorities.

4. Consult with prospects

In sales conversations, directly ask what security certifications procurement requires. Don't assume—ask.

5. Get a professional assessment

Before investing $30,000-$100,000 in compliance, spend time with a compliance expert who can validate your framework selection and identify gaps in your thinking.

Common validation mistakes to avoid:

✗ Assuming you need every framework you've heard of
✗ Pursuing frameworks based on competitor marketing rather than customer requirements
✗ Underestimating scope (especially for HIPAA)
✗ Overestimating scope (especially for PCI DSS when using third-party processors)

Conclusion — Start With What Closes Deals, Then Expand

Compliance framework selection doesn't need to be overwhelming. The decision comes down to a few key questions:

• What data do you handle?
• Who are your customers?
• Where are they located?
• What's blocking revenue today?

For most B2B SaaS startups, SOC 2 Type II is the starting point. It's what enterprise procurement teams expect, and it builds a security foundation that makes subsequent frameworks easier to achieve.

If you serve EU customers, add GDPR to your roadmap. If you handle health information, HIPAA is non-negotiable. If you process payments directly, address PCI DSS scope.

The key is prioritizing based on business impact, not pursuing every framework simultaneously. Start with the certification that will close deals today, build your compliance infrastructure thoughtfully, and expand your framework coverage as your business grows.

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Still have questions about which framework is right for your business? Check out our detailed guides on SOC 2 compliance, ISO 27001 certification, and compliance automation tools.