What it Takes to Get a PI Agency Up and Running

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Every PI has their own reasons for starting an independent private investigations agency. For Sheila Wysocki it was the murder of her former college roommate in Dallas.

Wysocki got the call on a Saturday morning telling her that her friend had been brutally attacked and killed. However it wasn’t until 30 years later, after starting her own private detective business, that Wysocki was able to crack the cold case.

Following every lead and using the latest advances in technology, Wysocki gathered enough evidence to identify a suspect and DNA evidence did the rest.

Wysocki’s story is an unusual one. Though what motivated her to get into the PI business is anything but textbook, the process she followed for establishing her agency is the same as it is for anybody else getting into the game.

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Basic Requirements For Individual and Agency Licensing

In most states, you need to approach the process for getting a PI agency up and running from a couple angles – a PI license for yourself as an individual, and a separate license for your company.

Let’s start with the basic requirements for individual PI licensing:

  • Be between at least 18 and 25 years old
  • Pass a background investigation (have a clean criminal record and good moral character)
  • 21 states require you to have between two and five years of relevant work experience and/or education

And the basic requirements for getting a PI agency licensed and up and running:

  • Have an individual PI license
  • Have a surety bond and/or liability insurance
  • Have a general business license

35 states require a PI agency license issued at the state-level if you want to own or operate a private investigations agency. The other 16 licensing jurisdictions don’t issue separate PI agency licenses. Instead, they either 1) don’t license PIs or PI agencies at all, 2) recognize individually licensed PIs as being able to establish a PI business by following the standard rules for business licensing, or 3) require individually licensed PIs to meet requirements that are similar to what is usually required for agency licensing and consider the licenses to be one and the same.

If you’re looking to start your own agency, there is a good chance you already hold an individual PI license. If you’re just getting into the private investigations field and you’re looking to qualify for your initial license, see our home page for information on individual PI licensing in your state.

If you’re ready to strike out on your own, build a business and even hire a team of specialized investigators to work under you, read on …

Know the PI Agency Licensing Laws Where You Live

Review the requirements in your state:

  • If your state requires a PI agency license, you can follow the link to learn more about qualifying and applying.
  • If your state has no PI agency licensing requirements, you can use your individual PI license to get your business started. You’ll find information on business licensing and bonding in the sections below.

Alabama – No PI agency licensing requirement; only individual licensing is required

Arizona – Requires a private investigator agency license; eligibility requires three years of experience (Arizona Department of Public Safety, Licensing Unit)

Arkansas – Requires a company license (five different classes depending on what work you do); qualifying requires two years of work experience and liability insurance minimum of $500k (Arkansas State Police)

California – Requires a qualified manager license for PI agencys; to qualify you must pass an exam and meet one of these three requirements: 1) three years of experience (6,000 hours), 2) law degree or four-year police science education plus two years (4,000 hours) of experience, or 3) a relevant associate’s degree plus 2.5 years (5,000 hours) of experience; if anyone at your agency carries a firearm there are additional requirements (California Department of Consumer Affairs, Bureau of Security and Investigative Services)

Colorado – Requires a private investigator business license; has the same qualification requirements as an individual PI license: be at least 21 years old, pass an exam, and post a surety bond (Colorado Department of Regulatory Agencies, Office of Private Investigator Licensure)

Connecticut – Requires a company license; you must meet all eligibility requirements for individual licensure, show proof of having a business license, and be additionally licensed through the Special License and Firearms Unit (Connecticut Department of Emergency Services and Public Protection, Division of State Police)

Delaware – Requires a private investigative and private security agency license (three different classes); to qualify you must have between four and five years of experience, a surety bond for at least $10k-$15k, and $1 million liability insurance per occurrence (Delaware State Police, Professional Licensing)

District of Columbia (DC) – Requires a private detective agency license; to qualify you must pass an exam and obtain a $5k surety bond (managed by the DC Department of Consumer and Regulatory Affairs (security), information through Pearson VUE)

Florida – Requires a private investigative agency license; to qualify you must be at least 18 years old (Florida Department of Agriculture and Consumer Affairs)

Georgia – Requires a private detective business license; to qualify you must post a $25k surety bond or have at least $1 million in liability insurance, pass an exam, and have one of the following three qualifications: two years of PI experience, two years of law enforcement experience, or a four-year degree in criminal justice or a related field (Georgia Board of Private Detectives and Security Agencies)

Hawaii – Requires a private and guard agency license; to qualify you must post a surety bond of at least $5k (Hawaii Department of Commerce and Consumer Affairs, Professional and Vocational Licensing)

Illinois – Requires a private detective agency license; to qualify you must hold an individual PI license which means having three years of related work experience; you can count a bachelor’s degree in law enforcement, a related field, or business towards two years of this experience requirement (Illinois Department of Financial and Professional Regulation)

Indiana – Requires a private investigator agency license; to qualify you must have a $100k liability insurance and either two years (4,000 hours) of PI experience or a bachelor’s degree in criminal justice (Indiana Professional Licensing Agency, Private Investigator and Security Guard Licensing Board)

Iowa – Requires a private investigator agency license; to qualify you must be at least 18 years old (Iowa Department of Public Safety)

Kansas – Requires a private detective agency license; to qualify you must have a surety bond, liability insurance, or have a state treasury deposit, all of which must be in the amount of $100k (Kansas Attorney General, Private Detective Licensing Unit)

Kentucky – Requires a private investigator company license; to qualify you must be at least 21 years old (Kentucky Board of Licensure for Private Investigators)

Louisiana – Requires a private investigator agency license; to qualify you must have at least three years of investigative experience (Louisiana State Board of Private Investigator Examiners)

Maine – No PI agency licensing requirement; only individual licensing is required

Maryland – Requires a private investigator agency license; to qualify you must be at least 25 years old, and meet either of these qualification requirements: five years of experience as a police officer, private detective, or fire investigator, OR three years of experience as a police detective or other government agency investigator (Maryland State Police, Licensing Division, Private Detective Unit)

Massachusetts – PI agency licensing requirements are the same as individual: at least three years of relevant work experience (Massachusetts Executive Office of Public Safety and Security)

Michigan – PI agency licensing requirements are the same as individual: post a $10k bond or insurance policy, be at least 25 years old, and have at least three years of relevant investigative experience (Michigan Department of Licensing and Regulatory Affairs)

Minnesota – PI agency licensing requirements are the same as individual: $10k surety bond, 6,000 hours of relevant investigative experience (Minnesota Board of Private Detective and Protective Agent Services)

Missouri – Requires a private investigator agency license; to qualify you must have a $250k liability insurance policy, and workers compensation insurance if you have any employees (Missouri Division of Professional Regulation, Board of Private Investigator and Private Fire Examiners)

Montana – No PI agency licensing requirement; only individual licensing is required

Nebraska – Requires a private detective agency license; to qualify you must have a $10k surety bond, pass a written exam, and meet one of the following three PI experience requirements: 3,000 hours experience, 2,500 hours of experience with an associate’s degree, or 2,000 hours of experience with a bachelor’s degree (Nebraska Secretary of State, Licensing)

Nevada – Requires a private investigator business license; to qualify you must be at least 21 years old and have five years of related investigative experience (10,000 hours; 2,000 hours per year); you can substitute an education in police science or criminal justice at the rate of: associate’s degree equals 1,333 hours of experience, and a bachelor’s degree equals 3,000 hours of experience (Nevada Private Investigator Licensing Board)

New Hampshire – Requires a private investigator agency license; to qualify you must have a $50k surety bond (New Hampshire Department of Safety, Division of State Police)

New Jersey – Requires a private detective business license; to qualify you must be at least 25 years old and have five years of experience with a government law enforcement agency (New Jersey State Police, Private Detective Unit)

New Mexico – Requires a private investigation company license; to qualify for this you must post a $10k surety bond (New Mexico Regulation and Licensing Department)

New York – Requires a PI business license; to qualify you must be 25 years old, post a $10k surety bond, pass an exam, and have three years of relevant work experience (New York Department of State, Division of Licensing Services)

North Carolina – No PI agency licensing requirement, only individual licensing is required

North Dakota – Requires a private detective agency license; to qualify you must complete an application (North Dakota Private Investigation and Security Board)

Ohio – Requires a private investigation company license; to qualify you must have a $100k liability insurance policy for each occurrence, and a $300k general aggregate insurance policy (Ohio Private Investigator Security Guard Services)

Oklahoma – Requires a private investigator agency license; to qualify you must be at least 21 years old and have general liability insurance coverage of $100k (Oklahoma Council on Law Enforcement Education and Training)

Oregon – No PI agency licensing requirement; only individual licensing is required

Pennsylvania – PI licensing is managed at the county level; see your county government for details

Rhode Island – PI licensing is managed at the county level; see your county government for details

South Carolina – Requires a private investigation business license; to qualify you must post a $10k surety bond and have three years of relevant work experience (South Carolina Law Enforcement Division)

Tennessee – Requires a private investigator company license; to qualify you must be at least 21 years old, pass an exam, and have either 2,000 hours of relevant work experience or one year of relevant education (Tennessee Department of Commerce and Insurance)

Texas – Requires a private security license; to qualify you must have three years of experience, pass a written exam, and have a liability insurance minimum of $200k for all occurrences (Texas Department of Public Safety, Private Security Bureau)

Utah – Requires a private investigator agency license; to qualify you must have liability insurance of at least $500k and 10,000 hours of investigative experience (Utah Department of Public Safety, Bureau of Criminal Identification)

Vermont – Requires an investigative agency license; to get this you fill out an application (Vermont Secretary of State)

Virginia – Requires a private security services business license; to qualify you must have a general liability insurance policy for $100k per occurrence and $300k aggregate, and meet one of these requirements: three years of managerial or supervisory experience in a private security services business or government law enforcement agency, or five years of general experience with such an entity (Virginia Department of Criminal Justice Services, Division of Licensure and Regulatory Services)

Washington – Requires a private investigative agency license; to qualify you must post a $10k PI surety bond or have two liability insurance policies for $25k each in bodily injury and property damage; you must be 21 if you’re applying for an armed license (Washington State Department of Licensing)

West Virginia – Requires a private investigation agency license; to qualify you must post a $2,500 surety bond and meet one of the following requirements: at least an associate’s degree in law enforcement, criminal justice, or a related field, have 3,200 hours of work experience with a PI agency, or an equivalent combination of work experience and education (West Virginia Secretary of State)

Wisconsin – Requires a private detective agency license; to qualify you must post a $100k bond or show proof of a liability insurance policy in this amount; Wisconsin does not require PI agency owners to hold an individual PI license if they are not personally involved with PI work (Wisconsin Department of Safety and Professional Services)

Five states have no PI licensing requirements at this time:

  • Alaska
  • Idaho
  • Mississippi
  • South Dakota
  • Wyoming

Surety Bonds and Liability Insurance for PI Agencies

Getting bonded and insured are a couple of the most common requirements you’ll run into when looking to establish a PI agency, and are actually common requirements for establishing may types of businesses. States will specify the dollar amount of coverage you’re required to have for a license.

Your state’s licensing authority will require the surety or insurance company you choose to be licensed to do business in your state. You can check this by looking the company up with your state’s insurance commissioner.

Surety Bond

A surety bond is a type of guarantee that will protect your customers from illegal or fraudulent activity committed by your PI business. A surety bond involves three parties; this aspect distinguishes it from insurance, which only involves two parties. You’ll run into these terms when you research surety bonds:

  • Principal – your business
  • Obligee – the government regulatory agency that requires you to get a surety bond, for example a state department of licensing
  • Surety company – the company that pays out the surety money

Here is how it works:

  • You go to a surety company and ask to post a $10k (for example) surety bond. Typically you won’t have to put up any collateral; you just pay a fee of between 1%-3% fee. So in this example you would pay a non-refundable fee of between $100 to $300 for the $10k bond.
  • The surety company writes out a contract that says if your PI agency breaks the law or defrauds your client, then your state’s regulatory agency can make a claim with the surety company against your bond. Your client would initiate the claim by making a complaint with your state’s regulatory agency. A claim would also be automatically initiated if you commit an infraction that is detected by a government regulatory agency.
  • If your PI business breaks the law and the surety company pays your government’s regulatory agency or client, the surety company can come after your business (or you, depending on the terms) to recoup all the costs associated with paying the state, including legal fees.

As you can see, a surety bond is more like a line of credit than a form of insurance.

Liability Insurance Policies

This is more straightforward. You buy a policy for $X that provides up to $X amount of coverage.

For example, in 2017 you could get a commercial general liability insurance policy for between $300 and $1,000 per year.

Commercial general liability is coverage designed to protect your company from damages resulting from accidental bodily injury and property damage to third parties. You may see liability insurance requirements for these individual items as well.

States usually require a general liability insurance policy of at least $100k.

Liability insurance doesn’t cover injury to your employees; for that you need to get worker’s compensation insurance.

General Business Licenses

In addition to a private investigator agency or agency license you’ll also need a general business license, just like any other business in your area. These are usually issued though your city or county’s licensing department, and you may encounter additional state and local tax requirements that come with having a business license.

There are different kinds of business licenses, and you need to choose which is best based on what type of PI agency you want to establish:

  • Sole proprietorship – for a business where you are the only person
  • Partnership – for a business where you share the costs, liabilities, and profits with one or several associates
  • Limited Liability Company (LLC) – for a business that is structured similarly to a partnership or sole proprietorship, usually with multiple employees; the LLC designation gives you some protection from certain acts and debts, as well as tax advantages not enjoyed by larger business models; in some states LLCs are known as professional limited liability companies (PLLCs)
  • Corporation – for a business that wants to shield its owners from certain liabilities, issue stock, and have full legal personhood; this model tends to be for larger companies that have many employees

Depending on the rules where you live, you may be required to obtain a business license before you can apply for a PI agency license.

Things to Consider About Different Business Models

  • You may be able to figure out your tax obligations with a sole proprietorship or partnership. But as you move on to an LLC or corporation, hiring an accountant becomes more practical. Many advise having an accountant even for sole proprietorships, and that goes double if you have employees.
  • Different states and cities have their own business tax requirements. Your city’s taxes and licensing department should be able to provide you with the relevant information.
  • If you have employees you’ll also need to meet worker’s compensation insurance requirements and other tax obligations.
  • Research the advantages of hiring employees versus hiring contractors; the laws on this vary by state.
  • While we’re on the subject of businesses, consider getting insurance that covers things like your own personal injury, unemployment, and building premises insurance.

Tips on Starting Your Own PI Company

These are a few tips to highlight from PIs who have made a career as successful business owners:

Figure out how you’re going to get a steady income

  • Develop relationships with local law enforcement agencies early on. It’s wise to show you’re on the right side of the law and friendly with law enforcement. This can come in handy in more ways than one.
  • Develop relationships with local law offices early on. They could provide a constant source of new business.
  • Get repeat clients as soon as possible. This helps free you up from doing things like advertising.
  • Don’t shy away from taking domestic cases, for example infidelity or child custody; this is likely where most of your initial business will come from.
  • You may need to start out doing something like process serving, where you track down and notify people of legal actions, before you can support yourself with work you’re more excited about.
  • Take criminal defense work if it’s offered. Don’t worry about the possibility that gathering evidence to support the defense of someone accused of a terrible crime will get the defendant off the hook. Your job is to investigate and uncover the truth. If you do your job well the court can do its job of determining guilt and serving justice.

Retain clients

  • Do good consistent work.
  • When you’re working with law offices they want a PI agency that can handle as many different cases as possible; diversifying your areas of expertise and expanding your workforce are two ways of doing this.
  • Even though you’ll be tempted, don’t set your client’s expectations too high at first or they will be disappointed
  • Remember that as a PI your reputation means everything

Professionalism

  • Often times the only people you need to convince are a judge or jury.
  • Clients are always going to prefer a PI agency with a professional environment and persona.
  • You’re going to be helping some people and ruffling the feathers of others; act professionally and don’t make it personal.
  • Don’t talk about your cases or clients with others; word will get around fast.
  • Practice everything before you do it. This holds true for introducing yourself to potential clients, tailing a car, or testifying in court.
  • Know how to search city, county, and state records.

Know the law where you’re working

  • Public photography and videography laws
  • Wiretap laws
  • Tracking device laws
  • Know the laws that apply to your investigation; this will help you know what level and quality of evidence you must gather

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