How to Become an Accredited Investor: Income, Net Worth, License

To become an accredited investor under the SEC’s Rule 501, you need to satisfy one of three individual tests: earn more than $200,000 a year on your own (or $300,000 with a spouse or spousal equivalent), hold a net worth above $1 million excluding your primary home, or maintain a Series 7, Series 65, or Series 82 license in good standing.¹ There is no application, no registry, and no certificate. Your status is confirmed by whoever is selling you the private investment, at the time you invest.

Qualify by Income

The income path is the most straightforward. You qualify if your individual income exceeded $200,000 in each of the two most recent calendar years and you reasonably expect to earn at least that much in the current year.² Filing with a spouse or spousal equivalent raises the number to $300,000 across the same two-year window, with the same forward-looking expectation for the current year.¹

A “spousal equivalent” is a cohabitant occupying a relationship generally equivalent to that of a spouse.³ Unmarried partners who live together can combine income to reach $300,000 the same way married couples can. One strong year won’t do it. You need two full years above the line and a reasonable basis for expecting a third.

Qualify by Net Worth

If your paychecks don’t get you there, net worth might. You qualify with more than $1 million in net worth, calculated on your own or jointly with a spouse or spousal equivalent.⁴ Add up assets, subtract liabilities, and check the result against the threshold.

Your primary residence is the one asset that doesn’t count. Home equity cannot push you over the line. There is a wrinkle: if your mortgage balance is larger than the home’s fair market value, that negative difference is subtracted as a liability.⁴ So a home worth $400,000 with $450,000 owed on it pulls $50,000 off your net worth.

Everything else counts normally. Bank accounts, brokerage accounts, retirement accounts, real estate other than your home, and other investments go on the asset side. Personal loans, credit card balances, auto loans, and student debt go on the liability side. Joint calculations can include both partners’ assets whether held jointly or individually.³ The $1 million must be met at the time of the investment transaction, not at some earlier planning stage.⁴

Qualify by Professional License

You can skip the financial thresholds entirely if you hold one of three FINRA-administered licenses in good standing:¹

Series 7, the General Securities Representative license
Series 65, the Investment Adviser Representative license
Series 82, the Private Securities Offerings Representative license

“Good standing” means your registration is active. When you leave a FINRA member firm, your registration stays current for a window afterward, and you remain accredited during that window. Once it lapses, this route closes until you re-register.⁵

Other Ways to Qualify

Two narrower paths exist. If you work for a private fund such as a hedge fund or venture capital fund, you can qualify as a “knowledgeable employee” for offerings by that fund and other funds run by the same firm, without meeting any financial threshold. The category covers directors, certain executive officers, and employees who participate in the fund’s investment activities.⁶ It doesn’t carry over to unrelated offerings.

Entities can also qualify. Corporations, partnerships, LLCs, trusts, 501(c)(3) organizations, and employee benefit plans with more than $5 million in assets are accredited, as long as they weren’t formed specifically to buy the securities being offered. Family offices above $5 million qualify, and so do their family clients.¹

How Your Status Gets Confirmed

There is no government-issued proof of accredited status. The issuer selling the securities is the one who confirms you qualify, and how carefully they look depends on the type of offering.

Rule 506(b): Reasonable Belief

In a Rule 506(b) offering, the issuer can’t use general advertising and must have a “reasonable belief” that each investor is accredited. That belief depends on the circumstances, including the issuer’s relationship with you and what it already knows about your finances. Checking a box on a form, by itself, isn’t enough if the issuer has no other information about you.⁷

Rule 506(c): Reasonable Steps to Verify

Rule 506(c) offerings can be advertised publicly, and the tradeoff is a higher bar for confirming investors. The issuer must take “reasonable steps to verify” that every investor is accredited.⁷ The SEC lays out non-mandatory safe harbors. For income, that means the issuer reviews IRS forms for the last two years and gets a written statement that you expect to hit the threshold again this year. For net worth, the issuer reviews asset and liability documents dated within the prior three months and gets your written representation that you’ve disclosed all liabilities.

In March 2025, SEC staff guidance made 506(c) verification lighter in one scenario. An issuer can rely on self-certification combined with a sufficiently high minimum investment amount, as long as you also represent that your investment isn’t financed by a third party for that specific purchase and the issuer has no actual knowledge that you aren’t accredited.⁸

Documents to Have Ready

For income verification, expect the issuer to want IRS forms covering the last two years. That’s typically W-2s if you’re an employee, or Form 1040 returns if your income comes from multiple sources. Schedule K-1s or 1099s come into play if you have income from partnerships or S corporations.⁷ You’ll also sign a written statement confirming you expect to meet the threshold in the current year.

For net worth, plan on bank statements, brokerage statements, and CD documentation on the asset side, along with a credit report from one of the nationwide consumer reporting agencies to show your liabilities. Documents should generally be dated within the prior three months, and you’ll sign a written representation that you’ve disclosed everything relevant.⁷

If you’d rather not send tax returns and account statements to the issuer, there’s an alternative. A registered broker-dealer, SEC-registered investment adviser, licensed attorney, or CPA can issue a written confirmation of your accredited status, which the issuer then relies on. Third-party verification services typically charge between $50 and $500 depending on the complexity of the review.

What Qualifying Actually Gets You

Accredited status is a permission, not a recommendation. Private placements aren’t subject to the disclosure rules that apply to registered offerings, so you’ll generally get less information about a private deal than you would about publicly traded stock, and if the issuer doesn’t file regular SEC reports, ongoing information may be limited.⁹

Securities bought in a Rule 506 offering are “restricted securities.” You can’t resell them on the open market the way you’d sell a publicly traded stock, and there may be no exchange to sell them on at all. Expect to hold the position for a long time, potentially indefinitely.¹⁰ The SEC also notes that if an issuer doesn’t take steps to verify accredited status, or lets people invest who clearly don’t qualify, that itself can be a sign the offering isn’t complying with securities laws.⁹ You can lose everything you put in.

1
U.S. Securities and Exchange Commission. Accredited Investors
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Investor.gov. Accredited Investors – Updated Investor Bulletin
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eCFR. 17 CFR 230.501 – Definitions and Terms Used in Regulation D
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U.S. Securities and Exchange Commission. Accredited Investor Net Worth Standard
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SEC.gov. Final Rule – Amending the Accredited Investor Definition
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U.S. Securities and Exchange Commission. Amendments to Accredited Investor Definition
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U.S. Securities and Exchange Commission. Assessing Accredited Investors Under Regulation D
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U.S. Securities and Exchange Commission. No Action Letter – Latham and Watkins
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Investor.gov. Investor Alert – Advertising for Unregistered Securities Offerings
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U.S. Securities and Exchange Commission. Private Placements – Rule 506(b)