Starting a private investigation business: a checklist

Plenty of good investigators have struggled as business owners, not because the casework was weak, but because the business side was an afterthought. This checklist covers what to sort out before your first paying case, in roughly the order you’ll need it.

It’s general guidance, not legal or tax advice. The rules on licensing, business structure, insurance and taxes differ by state, and sometimes by city or county. Where a step depends on those rules, the checklist tells you who to ask.

1. Licensing: ask your state first

The Bureau of Labor Statistics notes that many states require private investigators to be licensed. Requirements differ widely: some states license individuals and agencies separately, some require experience or an exam, a few have no statewide license at all, and the licensing authority might be a professional board, a state police agency or another office.

Before anything else, contact your state’s licensing authority and find out:

• Whether you need an individual license, an agency license, or both
• Experience, training, exam and background-check requirements
• Insurance or bond requirements tied to the license
• Rules on using your license number in advertising, reports or contracts
• Rules on business names, and on employing or subcontracting other investigators
• Renewal periods and continuing-education requirements
• Whether local (city or county) licenses also apply

Our state guides summarize what we’ve found for each state, with links to the regulators, but always confirm with your state board. If a rule isn’t clear, ask the board directly or an attorney who works with investigators.

2. Business setup

• Choose a business structure (sole proprietorship, LLC, corporation). This affects liability, taxes and paperwork. Talk to an accountant or attorney before deciding.
• Register the business name as your state and county require, and check it doesn’t conflict with an existing business or with licensing rules.
• Get a tax ID and set up for the taxes that apply to you. An accountant is worth the fee in year one.
• Open a separate business bank account. Never mix personal and business money, especially client retainers.
• Set up bookkeeping from day one: invoices, expenses, mileage and receipts. Pursuit Magazine’s “The Business of Running a Business” describes a weekly paperwork day; plan one now.

3. Insurance

Insurance protects you and is often required by clients, especially insurers, law firms and corporate clients, before they’ll assign work.

• General liability
• Errors and omissions (professional liability)
• Commercial auto, or confirmation that your personal auto policy covers business use, including surveillance. Many personal policies don’t; ask your agent in writing.
• Cyber liability, worth considering since you’ll hold sensitive personal data. The FTC’s small-business cybersecurity guidance includes a section on what cyber insurance can cover.
• Equipment coverage for cameras and laptops
• Any bond your state requires

Use a broker who has placed coverage for investigators before, and keep a current certificate of insurance ready to send.

4. Startup costs and a budget

The SBA recommends estimating startup costs and working out your break-even point before you launch. For an investigator, typical first-year items include:

• Licensing, training and exam fees
• Insurance premiums
• Vehicle suited to surveillance (discreet, reliable, economical)
• Cameras, lenses, spares, memory cards, batteries
• Laptop and phone, with full-disk encryption on both
• Software: case management, accounting, a password manager
• Database and records subscriptions
• Website, business cards, association memberships
• Enough savings to cover several months of personal expenses while you build a client base

Then set your rates from your real costs, not just from what others charge (see pricing your investigation services).

5. Contracts and paperwork

• Engagement letter or retainer agreement template, reviewed by an attorney in your state (see our retainer agreement checklist)
• Intake form and conflict-check routine (see case intake)
• Subcontractor agreement template, if you’ll use other investigators (see subcontracting safely)
• Report template and surveillance log (see our report guide)
• Evidence handling and chain-of-custody forms (see chain of custody)
• Record-retention policy: how long you keep case files and how you destroy them (see case file retention)

6. Security from day one

You’ll hold exactly the kind of information people try to steal: addresses, financial details, medical information, surveillance footage. Setting up good security at the start is far easier than retrofitting it. NIST’s Small Business Cybersecurity Corner and the FTC’s small-business guidance are free and written for businesses your size.

• Full-disk encryption on every laptop and phone (see protecting your laptop in the field)
• A password manager and two-factor authentication on email, banking and case files (see password managers and 2FA)
• A secure way to message clients and deliver reports (see choosing secure messaging and sharing files securely)
• Encrypted backups, tested
• A short written plan for a lost device or a breach (see data breach response)

7. Your working systems

• One home for each case file, organized the same way every time (see organizing a case file)
• Time tracking that captures hours and mileage as you work, not afterwards
• Invoicing that matches your reports
• A calendar for license renewals, insurance renewals and continuing education

8. Finding first clients

• Decide on one or two specialties to start with. It’s easier to be known for something.
• Join your state association and attend its events; other investigators are a major source of referrals and subcontract work.
• Build relationships with attorneys and insurers in your area (see getting attorney clients and working with insurance adjusters).
• Put up a simple, honest website with your license details where your state requires them.
• Make your onboarding and communication excellent from the first client (see onboarding a new client). Referrals follow.

Before your first case

If you can tick these, you’re ready:

• Licensed (or confirmed that no license is required for your work)
• Insured, with a certificate ready to send
• Business registered, bank account open, bookkeeping set up
• Engagement letter reviewed by an attorney
• Rates set from your actual costs
• Devices encrypted, accounts protected with 2FA
• A system for case files, time and evidence

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