Individuals get one clean set of accredited-investor rules — income, net worth, a license. Entities are messier, and the two structures that trip people up most are the two most people actually invest through: the LLC and the trust. Both can absolutely be accredited investors. But an LLC and a trust get there by different routes, and the route decides what documents you need — and whether the "$5 million" number you have heard even applies to you.
Here is how each one qualifies under SEC Regulation D, Rule 501(a), in plain terms. We are not a law firm and this is not legal advice — confirm your entity's specific route with your counsel — but this is the map.
Can an LLC be an accredited investor?
Yes. An LLC — and the same logic covers corporations and partnerships — has two practical routes to accredited status, and they differ enormously in effort:
- Every equity owner is already accredited — the "look-through." No dollar threshold at all.
- The entity itself clears $5 million — and was not formed just to make this one investment.
Most small investment LLCs qualify the first way, not the second — which matters, because the first way is usually faster and cheaper to prove. People reach for the $5 million number because it is the one they have heard, and talk themselves into a harder path than they need.
Not sure which route fits your entity? Our free entity & trust accreditation calculator checks both the $5M asset test and the all-owners look-through in a few clicks.
The look-through: when all the owners are accredited
Rule 501(a)(8) says an entity in which all of the equity owners are accredited investors is itself an accredited investor. There is no minimum size. A two-member LLC where both members individually meet the income or net-worth test is accredited, full stop — even if the LLC itself holds almost nothing yet.
This is the route for the classic setup: a few partners pool money into an LLC to invest together, or a couple holds investments in a jointly owned LLC. To verify it, you do not document the LLC's balance sheet — you document that each owner is accredited (the same income, net-worth, or license evidence an individual would provide) and show the ownership roster. Our entity verification handles this as a look-through, verifying each owner in turn.
The catch: "all" means all. One owner who is not accredited breaks the look-through for the whole entity — and then you are back to the $5 million test. If your ownership is still moving around, settle the roster before verification.
The $5 million route — and the trap inside it
If the owners are not all accredited, an LLC can still qualify on size: broadly, an entity with more than $5,000,000 that was not formed for the specific purpose of making the investment. Rule 501(a) actually contains several $5 million entity tests measuring slightly different quantities — total assets for most business entities, and "investments" for a 2020 catch-all category — and which one applies depends on your structure. We take those apart paragraph by paragraph in The $5 Million Entity Test Is Four Different Tests.
The trap is that italicized phrase. If you spin up an LLC in order to make a particular investment, the $5 million route is closed to that entity — the rule specifically excludes vehicles formed for the deal, so a brand-new SPV cannot simply capitalize itself past the line. A vehicle formed for the deal has to qualify through its owners instead. Check the formation-purpose question before you count a single dollar.
Can a trust be an accredited investor?
Yes — but "trust" covers two very different animals, and they qualify in opposite ways. The single most useful question to ask first is: is the trust revocable or irrevocable? That one fact usually decides the route.
Revocable and living trusts — usually the easy case
A revocable trust — the typical family "living trust" you can amend or dissolve at will — is generally treated as an extension of the person who created it (the grantor). Because the grantor can revoke the trust and reclaim its assets, the trust is generally accredited when the grantor is accredited and keeps the power to revoke. In practice: if you are personally an accredited investor and you hold your investments in your own revocable living trust, the trust generally comes along with you.
To verify it, you document the grantor's accredited status (income or net worth, exactly as an individual would) and confirm from the trust instrument that it is revocable and that the grantor is the one directing the purchase. This is usually the shortest path of any entity.
Irrevocable trusts and the $5 million trust test
An irrevocable trust cannot lean on a grantor who has given up control, so it has its own route under Rule 501(a)(7). Three conditions, all required:
- Total assets over $5,000,000;
- not formed for the specific purpose of acquiring the securities being offered; and
- the purchase is directed by a "sophisticated person" — someone with enough knowledge and experience in financial and business matters to evaluate the merits and risks of the investment.
That third condition is the one people forget. The $5 million is necessary but not sufficient; a large irrevocable trust whose purchase is directed by someone without the experience to evaluate it does not qualify on this route. Have a clear answer to "who is directing this, and what makes them capable of evaluating it" before you start.
There are narrower routes too — an irrevocable trust whose trustee is a bank or trust company acting in a fiduciary capacity can qualify through the institutional-trustee rules, and a trust in which every beneficial owner is independently accredited may reach the look-through. Which one applies is genuinely structure-specific — this is the point to loop in your counsel or CPA rather than guess.
What a CPA needs to verify an entity
For a 506(c) offering, the issuer needs reasonable verification of accredited status — and for entities that almost always means a written confirmation from a licensed professional, because the analysis is exactly the "which paragraph applies" question above. What shortens it:
- Say which route you are claiming. Owner look-through, $5 million, or grantor / revocable-trust. The document list flows from the route, not the other way around.
- For a look-through: the ownership roster plus each owner's accredited-status evidence.
- For the $5 million route: an entity balance sheet or statement of assets — not just brokerage statements, which answer a narrower question — plus the formation document showing the entity was not created for this deal.
- For a trust: the trust instrument (to show revocable vs irrevocable and who directs purchases), plus grantor accredited-status evidence for a revocable trust, or the asset statement and the sophisticated-person basis for an irrevocable one.
A CPA identifies the paragraph your LLC or trust falls under, applies the measure that paragraph actually uses, and issues the signed letter your sponsor can rely on. If you are weighing net worth for yourself or a grantor first, our net worth calculator is a quick starting point, and the eligibility quiz walks the individual routes.
Separately from accreditation, some sponsors also want the entity itself confirmed — and business verification is available as an add-on for exactly that: an official registry lookup that establishes the entity exists and is in good standing, identification of its beneficial owners, and a sanctions screen of the entity. It is optional and independent of the accreditation letter, which stays the document your sponsor relies on for Rule 506(c).
Entity verification, with the right route applied
A licensed CPA identifies how your LLC or trust qualifies — the owner look-through, the $5 million test, or the grantor route for a revocable trust — and issues the signed letter. Entity verification from $199 covering up to two entities · $499 on the $5 million asset test · $99 per owner where a look-through is the cleaner path.
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