3 Steps
Upload
Enter basic personal information and upload the documents
Verify
Select your basis of Accreditation and submit evidence online
Certificate
Receive a universally accepted Accredited Investor electronic certificate
Choose the approach that fits
According to the Regs, an individual investor can qualify as Accredited under 2 primary methods – Annual Income or Net Worth .
$69
Annual Income Approach
Potential Supporting Document:
- Tax Returns
- W-2s
- Schedule K-1s
- Form 1099s
$69
Net Worth Approach
Potential Supporting Document:
- Bank Statements
- Brokerage Statements
- Securities Holdings Statements
- Certificates of Deposit
- Consumer Credit Reports
- Tax Assessments
- Appraisal reports
Simple
Customers fill out a simple questionnaire, make a few certifications, and upload supporting documentation. Most users will spend less than 5 minutes on our site to complete the process.
Reliable
Companies can rest assured that use of Flex Tax meets the new federal requirement of taking “reasonable steps” to verify their investors. Investors can always rely on us to securely manage their confidential information—safe from any unauthorized and prying eyes.
Confidential
All verification reviews are conducted by licensed certified public accountant who are bound by professional ethical codes and duties of confidentiality. Investors have the option to hide their personally identifiable information so that even the reviewers will not see it before sending to us.
Our clients say
Frequently asked questions
Typically, when a company raises capital, it has to register its securities (basically the shares/interests that they are offering for sale). Registration is expensive and takes a long time. Most companies look for an exemption from registration. The most common exemption used by companies for this purpose is the private placement exemption, which basically meant the companies couldn’t publicly solicit or advertise. That makes it difficult to raise money.
The “Jumpstart Our Business Startups Act”, or the “JOBS Act” changed that. The JOBS Act allows companies to publicly solicit for funds and advertise while still conducting a private offering. However, it comes with a major catch. The only investors allowed to invest must be “accredited investors”, and the company raising money has to verify that their investors are truly accredited investors. A simple questionnaire is not sufficient – instead, companies must take further “reasonable steps” to prove their investors are accredited investors. Failure to comply is a violation of federal laws and may subject the company to enforcement action and the obligation to return money raised. That’s obviously bad for companies, but it’s also bad for investors who don’t know if the companies they invested in will suddenly have to return a portion of its capital to other disgruntled investors.
Flex Tax adopts best practices for verification because the penalties of noncompliance are so severe. Part of the verification process includes a review by a licensed certified public accountant. We expect that most verifications will take one or two business days to complete, assuming. Of course, that we are provided with all the necessary information to perform the verification review.
The documentation that is required depends on the type of accredited investor. After you’ve indicated to us what type of accredited investor you are, we’ll prompt you to upload certain documentation. For instance, if you qualify by an income test, you may be prompted to upload a W2, K1, or 1099. Other types of accredited investors may have to upload an officer’s certificate or detail out their assets. In the case of an individual qualifying under a net worth test, their liabilities as well. The reviewer of your file may ask you to upload additional evidence as appropriate. We recognize that this information may be highly sensitive and confidential.
The government understands that investments take time and that it could be frustrating to have to get verified repeatedly. On the other hand, the government also recognizes that an investor that qualifies as an accredited investor today may not qualify tomorrow. Accordingly, under federal law, the verifications are only good for three months. Our verification certificates will explicitly state the date that the verifications expire.
We are significantly better for many reasons. All of our verifications meet the minimum legal requirements prescribed by the Securities and Exchange Commission. For individual investors, we’ll generally fall into two safe harbor guidelines that ensure use of our verification services meets minimum legal requirements. Many other third party reviewers might not conduct a legally compliant review. All of our verifications are performed by licensed certified public accountant that are experts in this specific area of law. Additionally, we have much better security and confidentiality than what most third parties, including attorneys and other licensed professionals, generally have. We’re also faster. In less time than it takes you to find a licensed professional (never mind formally engaging one with a written engagement letter), you’ll be done with Flex Tax. Lastly, we’re inexpensive.
An “accredited investor” is a type of investor. Generally, sales of securities must be registered with the SEC unless an exemption is found. Some of the exemptions require sales to be made to accredited investors. Our application lists out the various categories of accredited investor. The Securities and Exchange Commission also has a helpful page on accredited investors here: https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-accredited-investors
1. A natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.
OR
2. Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of calculating net worth:
• The person’s primary residence shall not be included as an asset;
• Indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and
• Indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability.
OR
3. A director, executive officer, or general partner of the issuer of the securities being offered or sold, or a director, executive officer, or general partner of a general partner of that issuer.
That’s very helpful. It’ll help you understand our workflow. Unfortunately, because of the new laws applicable to fundraising, your status as an accredited investor must now be verified for certain types of securities offerings.
Generate a statement from your cryptocurrency account or wallet ideally showing the account holder name and amount of holdings. Please also provide a link to a website that shows the value of the cryptocurrency in USD or provide a screenshot. The reviewer may ask for you to create a cryptographic proof of ownership by signing a message.
If you have access to a scanner, you may scan that documentation into a PDF format. Alternatively, you can take a picture using your camera and save it into PNG or JPG format. It is not recommended to use the picture method if you have many pages to scan.
The income test generally requires that you have income exceeding $200,000 USD in each of the two most recent years and a reasonable expectation of the same income level in the current year. Alternatively, you could try to qualify with the joint income of you and your spouse, if you have one. If your joint income with a spouse exceeds $300,000 USD for those years with a reasonable expectation of the same income level in the current year, then both you and your spouse would qualify as accredited investors. Evidence of the income should be supported by official tax records such as tax returns, W-2, K-1, 1099, or other government documents, if possible.
Unfortunately, this type of verification is one of the more complicated ones under law. A trust may be accredited if it has assets in excess of $5 million and its purchases are made by a sophisticated person. An entity, like an LLC, corporation, or LP may be accredited if it simply has assets in excess of $5 million. For the purposes of verification, a trust or entity cannot be formed for the specific purpose of acquiring the securities being offered. Typically, one would show the minimum assets by providing a bank statement or perhaps an appraisal of real estate held by the trust or entity.
If the trust or entity does not meet the minimum assets test, it might also be able to qualify as an accredited investor if all of its equity owners are accredited investors. This method of verification may be a bit complex, so if it applies to you, please feel free to contact us, and we’ll walk you through it.
We built our system so that it could verify foreign investors and international accredited investors. We’ve processed verifications for foreigners all around the world. If you use our system and it seems to call for US specific documents, provide them if you have them, or use similar documents from your own country. If you have any questions, just contact us, and we’ll be happy to help you.
It’s easy. From our homepage, click on the button that says “Get Started” to submit an order. If you have any questions, please contact us.
Traditionally, companies seeking to secure financing had to register their securities, a process that is both time-consuming and costly. To bypass this, many opt for exemptions like the private placement exception, which restricted them from publicly advertising or soliciting investments, making fundraising a difficult endeavor.
However, the landscape changed with the introduction of the Jumpstart Our Business Startups Act, commonly known as the JOBS Act. This legislation enables companies to openly seek and advertise for investment while still conducting a private offering. The caveat is that investments can only be accepted from “accredited investors,” and the companies must rigorously verify the accreditation status of these investors. Failure to comply can result in federal penalties and potentially require returning the raised capital, creating risks for both companies and investors alike.
Given the high stakes involved in noncompliance, Flex Tax employs stringent best practices for verification, including a review by a certified public accountant. Most verifications are expected to be completed within one or two business days, provided all necessary information has been submitted.
The type of documentation required is contingent on the kind of accredited investor you are. Once you specify your investor category, you’ll need to upload supporting documents, like a W2, K1, or 1099 if you’re meeting income criteria. Different types of documentation may be required for other investor categories, potentially including a comprehensive list of assets or an officer’s certificate.
While the government recognizes that undergoing verification multiple times can be cumbersome, the validity of the accreditation is limited to three months by federal law, as your financial status can change.
Flex Tax offers a multitude of advantages, such as full compliance with SEC minimum standards, highly secure handling of sensitive information, and speedier processing times. Our verifications are carried out by licensed certified public accountants specializing in this legal area.
An accredited investor is a specific classification of investor who is allowed to engage in securities transactions that are generally not registered with the SEC. Specific criteria can be found on the SEC website, and these are also outlined in our application.
An individual earning over $200,000 annually for the past two years, or $300,000 when combined with a spouse, with an expectation of maintaining that income level.
OR
An individual or spouse with a net worth exceeding $1,000,000, not including the value of their primary residence.
OR
Company executives, directors, or general partners involved in the securities offering.
Even if you’re aware of your status, new regulations still require verification for certain types of securities offerings.
Submit an account statement or wallet snapshot that shows your holdings in cryptocurrency, along with a reference to its current value in U.S. dollars.
If your documents aren’t digital, you can scan them into a PDF or take photos in PNG or JPG formats.
To qualify based on income, you should have earned more than $200,000 annually for the last two years, or $300,000 when combined with a spouse.
Verification for entities like trusts or LLCs is more complex, typically requiring proof of over $5 million in assets.
If the trust or entity does not meet the minimum assets test, it might also be able to qualify as an accredited investor if all of its equity owners are accredited investors. This method of verification may be a bit complex, so if it applies to you, please feel free to contact us, and we’ll walk you through it.
Yes, our system is designed to validate both domestic and international investors.
Simply visit our homepage and choose the “Get Started” option to initiate the process.
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