How Do I Verify Accredited Investors, What Does It Cost, and Does the 2025 Shortcut Help Me?
By Joel Arberman, founder of Prepared to Raise · 17 companies taken public, 30+ private placements prepared · Reviewed October 21, 2026
Who counts as accredited
For individuals, the most common tests are:
- Income over $200,000 in each of the last two years ($300,000 with a spouse or spousal equivalent), with a reasonable expectation of the same this year;
- Net worth over $1 million, alone or with a spouse or spousal equivalent, not counting the primary residence; or
- A professional license: Series 7, 65 or 82 in good standing.
Entities qualify through tests based on assets, ownership or type.
Why 506(c) needs verification
Under Rule 506(b), an investor's written questionnaire is usually enough. Under Rule 506(c), because you advertised publicly, you must take reasonable steps to verify. One purchaser who is not accredited, or whom you did not reasonably verify, can cost you the exemption for the whole offering.
The methods
- Income review. IRS forms such as W-2s, 1099s or tax returns for the two most recent years, plus the investor's written statement that they expect to qualify this year.
- Net worth review. Bank, brokerage and similar statements dated within the prior three months, a credit report for liabilities, and a written statement that all liabilities have been disclosed.
- Third-party letter. Written confirmation, dated within the prior three months, from a registered broker-dealer, SEC-registered investment adviser, licensed attorney or CPA that they have verified the investor's status.
- Prior verification. An investor you verified in an earlier offering within the past five years can certify in writing that they still qualify, unless you know otherwise.
- Other reasonable steps, judged on the facts, including the 2025 minimum-investment approach below.
What it costs
- Online verification services commonly charge about $50 to $100 per investor, with results in a day or two. Some charge the issuer, some the investor.
- A letter from the investor's own CPA or attorney can cost the investor several hundred dollars and take a week or more.
- Doing it yourself costs staff time and means handling investors' tax returns and statements, with the privacy and security obligations that come with them.
For a raise of 30 to 50 investors, a verification service typically adds a few thousand dollars, small next to the risk of losing the exemption.
The 2025 shortcut, and why it rarely helps
On March 12, 2025, SEC staff issued a no-action letter accepting a simpler approach. An issuer can treat verification as satisfied if:
- each individual investor commits at least $200,000 (entities at least $1 million);
- the investor represents in writing that they are accredited and that the investment is not financed by a third party; and
- the issuer has no knowledge to the contrary.
For private funds and larger deals, that is a real simplification. For most growing companies raising from individuals, it is not, because most individual checks in raises of this size are well below $200,000. Setting a $200,000 minimum would shut out many of the investors you are trying to reach. It is also staff guidance, not a rule. Most issuers in our range still verify the conventional way.
Practical tips
- Verify before you accept money, and before issuing securities.
- Tell investors early what verification involves, so it doesn't feel like a surprise at closing.
- Keep records of what you reviewed and when.
- Watch for red flags, such as an investor whose stated job doesn't match the claim. Reasonable steps means reacting to what you know.
Related questions
Do I need to verify in a 506(b) offering?
No. Under 506(b) you need a reasonable belief that investors are accredited, usually established with a questionnaire. 506(b) vs 506(c).
Can my investor refuse to share tax returns?
Yes. Offer a third-party letter or a verification service instead.
Is the accredited investor definition changing?
The SEC's regulatory agenda includes a review of exempt offering pathways, which may touch the definition. Until a change is adopted, the current tests apply.
Where to start
The 506(c) extension ($5,000, added to Network Raise or Growth Capital) includes setting up your verification process alongside the advertising plan. The full 506(c) process.
Prepared to Raise is a service of Meraki Partners, LLC. This article is general information, not legal, tax or investment advice, and not an offer to sell or a solicitation to buy any security. Meraki Partners is not a broker-dealer, funding portal, investment adviser or law firm. Figures are as of the review date above.