How to Become an Accredited Investor: Income, Net Worth, and Licenses

To become an accredited investor under SEC Rule 501 of Regulation D, you need to meet at least one of three personal tests: earn more than $200,000 a year on your own (or $300,000 with a spouse or spousal equivalent) for the last two years with the same expected this year, hold a net worth above $1 million excluding your primary home, or hold a Series 7, Series 65, or Series 82 license in good standing.¹ There is no application, no card, and no government registry. You qualify by meeting the criteria, and the company or fund selling you a private offering verifies that you do at the time you invest.

Qualify by Income

The income path is the most straightforward. Your individual income must have exceeded $200,000 in each of the two most recent calendar years, and you must reasonably expect to earn at least that much again in the current year.² Filing jointly with a spouse raises the threshold to $300,000 across the same two-year window with the same forward-looking expectation.

The SEC treats a “spousal equivalent” — a cohabitant in a relationship generally equivalent to that of a spouse — the same as a married partner for this purpose, so unmarried partners who live together can combine income against the $300,000 line.³ A single strong year does not qualify you. The rule is looking for sustained earnings and a credible reason to think they will continue.

Qualify by Net Worth

If your income is short, net worth is the second door. You qualify if your assets minus your liabilities exceed $1 million, calculated either alone or jointly with a spouse or spousal equivalent.⁴ The value of your primary residence is excluded from the asset side, so home equity cannot carry you over the line.

Everything else generally counts as an asset: bank accounts, brokerage accounts, retirement accounts, investment real estate, and other holdings. On the other side of the ledger, subtract personal loans, credit card balances, auto loans, and student debt. If you calculate jointly, you can combine assets whether they are held jointly or individually.³ The number has to work at the moment of the investment transaction, not when you first started talking to the issuer.⁴

One wrinkle on the home exclusion: if your mortgage balance is greater than the home’s current fair market value, the excess debt does count as a liability. A home worth $400,000 with a $450,000 mortgage takes $50,000 off your net worth.

Qualify by Professional License

Since 2020, the SEC has allowed a third route that ignores income and net worth entirely. If you hold any of three FINRA-administered licenses in good standing, you qualify:¹

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

“In good standing” means your registration is active. If you leave a FINRA member firm your registration stays current for a window afterward, and you remain accredited during that time. Once it lapses, this path closes unless you re-register.⁵

Other Ways In

Two narrower categories are worth knowing about. If you work for a private fund as a director, certain executive officer, or an employee who participates in the fund’s investment activities, you can invest in that fund’s offerings — and offerings by other funds managed by the same firm — without meeting any financial test. This “knowledgeable employee” status does not carry over to unrelated private deals.⁶

Entities can qualify too. Corporations, partnerships, LLCs, trusts, 501(c)(3) organizations, employee benefit plans, and family offices holding more than $5 million in assets are accredited, so long as the entity was not created solely to buy the securities being offered.¹

How an Issuer Confirms Your Status

Because there is no official certificate, the issuer of each private offering has to satisfy itself that you qualify. How rigorous that process is depends on which rule the offering uses.

Rule 506(b)

In a 506(b) offering, the issuer cannot advertise generally and only needs a “reasonable belief” that you are accredited. Whether that belief is reasonable depends on the circumstances, including the relationship between you and the issuer and what the issuer already knows about your finances.⁷ Checking a box on a questionnaire, with nothing else behind it, is not enough.

Rule 506(c)

A 506(c) offering can be advertised publicly, and in exchange the issuer must take “reasonable steps to verify” that every investor is accredited. That is a higher bar. The SEC publishes non-mandatory safe harbors that automatically satisfy it. For income, the issuer reviews IRS forms from the two most recent years and gets your written statement that you expect to hit the threshold again this year. For net worth, the issuer reviews asset and liability documentation dated within the prior three months and gets your written representation that you have disclosed all your liabilities.⁷

In March 2025, SEC staff issued guidance that eased the verification burden. An issuer may now rely on a combination of your self-certification and a sufficiently high minimum investment amount, provided you also represent that no third party is financing the investment for the specific purpose of making the purchase and the issuer has no actual knowledge that you are not accredited.⁸ The practical effect is that many 506(c) issuers now ask for less paperwork than they once did.

Documents to Have Ready

When an issuer runs a traditional 506(c) verification, expect to hand over records that back up whichever test you are using.

For income, that means IRS forms covering the two prior years — W-2s if you are an employee, Form 1040 returns if your income comes from multiple sources, plus K-1s or 1099s for partnership, S-corp, or contractor income. You also sign a statement that you reasonably expect to meet the threshold again this year.⁷

For net worth, expect requests for bank statements, brokerage statements, and certificates of deposit on the asset side, plus a credit report from a nationwide consumer reporting agency to document liabilities. Documentation should generally be dated within the prior three months, and you sign a representation that you have disclosed all your liabilities.⁷

If handing tax returns and account statements to an issuer feels invasive, there is an alternative. A registered broker-dealer, SEC-registered investment adviser, licensed attorney, or certified public accountant can issue a written confirmation of your accredited status that the issuer will accept in place of the raw documents. Third-party verification services generally charge between $50 and $500 depending on the complexity of the review. Once verification is complete, you sign a subscription agreement setting out the number of shares and the purchase price.⁹

What You’re Getting Access To, and the Risks

Accredited status unlocks private offerings like hedge funds, venture capital, and private equity. These are not registered with the SEC, and they carry fewer disclosure protections than publicly traded securities. The rules assume that people who clear the thresholds can evaluate the risks and absorb the losses.

In practice, you will generally receive less information about a private placement than you would about registered stock, and if the company or fund does not file regular reports with the SEC, updates on your investment may be sparse.¹⁰ Shares bought in a Rule 506 offering are “restricted securities,” which means you cannot resell them freely on the open market. You may need to hold them for an extended period, sometimes indefinitely, because there is no public exchange where they trade.¹¹

The SEC has also flagged a warning sign to watch for: if an issuer does not bother to check your accredited status, or lets you participate when you clearly do not qualify, that may indicate the offering itself is not complying with securities laws.¹⁰ You can lose an entire investment in a private placement. Qualifying gets you in the room. Everything after that is on you.

1
U.S. Securities and Exchange Commission. Accredited Investors
2
Investor.gov. Accredited Investors – Updated Investor Bulletin
3
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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Securities and Exchange Commission. Regulation D Subscription Agreement
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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)