At present, there are over 13 million accredited investors in the USA. You might be wondering why the number is so high. Well, there is hardly any drawbacks and a lot of perks of being an accredited investor. First of all, you get access to a wide range of investment opportunities via private placements and more. Secondly, many smaller private companies provide more profits to their investors.
What breed are accredited investors according to the SEC?
In the USA, an accredited investor is referred to as someone who satisfies one of the following conditions:
When income exceeds $200,000 (or $300,000 with a spouse) for the prior two years, and a high possibility of the same income margin in the current year.
On the other hand, when someone has a net worth of $1 million, either alone or with a spouse besides the value of the person’s main residence.
- Third-party verification method
Simultaneously, to make an accredited investment in Arizona, one needs to prove himself an accredited investor in the following ways:
- By a registered broker-dealer
- By an investment consultant who is registered with the Securities and Exchange Commission (SEC)
- By a licensed lawyer who has complied with all their explicit obligations, while not being subject to any form of sanction, suspension or disciplinary censure by the laws of jurisdictions where he or she is allowed to practice law.
- By a certified public accountant who is duly registered, complied with all their explicit obligations, while not being subject to any form of sanction, suspension or disciplinary censure by the laws of place where of his or her residence or principal office.
- Also, a written confirmation which will be given, should certify that all the rational steps were taken to verify that you are an accredited investor before three months.
- Income verification method
One can also provide official or government records to prove his or her income by tax filings or pay stubs. Nevertheless, you can also get a letter from your accountant or employer confirming your annual income. However, you will be required to make an affirmative statement that your anticipated income in the present year will match the minimum income level.
- Net Worth Verification
You also have the option to disclose your assets and liabilities to calculate the net worth by presenting them a credit report, proof of the assets along with the disclosure of the liabilities.Once you have made it this far, then you are an accredited investor. There are many who qualify as an accredited investor yet they are not aware of it and hence, have no idea about how to take advantage of it.
Being an accredited investor, one can support start-up companies with the goal of taking care of the business. In such scenarios, sites like AngelList provides the platform to connect you with small business owners looking for investors to transform their dreams into reality.