14 Best Steps to Start a Private Investigation Business

Starting a Private Investigation Company

Individuals wanting to start a private investigation business will have a variety of backgrounds and experiences.  No matter what country you reside in, the minimum requirements to start an investigation agency won’t be the same in every location.

In the United States, each state will vary in regards to the experience needed to begin a private investigation business from extensive experience to no experience at all. 

In the state of Washington for instance, an individual can obtain a private investigation business license by paying a fee of $600 and taking an examination to obtain their Washington State private investigation agency license.  Washington provides a list of study material for private investigation agency test.  

Within Washington State, an individual can also obtain their license by having 3 or more years of verifiable investigation experience and paying the $600 fee.  Washington also requires you to carry a bond or insurance and have no criminal convictions.  Other states may not require any licensing so be sure to check with your state on their requirements.

Other states in the United States may not have that option and may require a specific amount of practical investigation experience or a combination of experience and education. 

We will cover the fundamental steps to starting a private investigation business and considerations along the way.

Here are the areas we will cover when starting a private investigation agency:

• Determining Private Investigation Agency Requirements and Experience.
• Determining Your Private Investigation Agency Name.
• Finding a Website for Your Company.
• What Business Structure Will You Have?
• Type of Insurance or Bond Needed.
• Determining What Services You Will Offer
• Creating a Business Plan
• Open a Business Bank Account
• Office Location
• Set Up a Personal Mail Box or P.O. Box
• Private Investigation Company Start-Up Cost
• Private Investigation Marketing Considerations
• Continuing Education
• Private Investigation Networking

Steps to Start a Private Investigation Company

The first step in starting a private investigation agency is to determine the requirements for the state you wish to start your business in.  

By knowing the requirements that need to be met, you are able to take the necessary steps toward meeting the requirements.

In most states the following requirements need to be met:

• You must be 18 years or older
• You must have a specific amount of transferable experience or actual experience
• Education may substitute as experience
• You must have a clean criminal record
• Be a United States citizen

Provide Documentation and Pay Required Fees

Each state within the United States requires a professional private investigation agency license is governed by an agency within the state.

College Transcripts

You will be required to provide documentation of any degrees you have with transcripts.  By requesting these early on you won’t have to wait for them as your begin the application process.  Generally speaking, this can be completed online through the college website.

Investigative Experience

Again, every state may identify investigation experiences differently. If you have worked for a private investigation company to build your experience, you will need to provide proof of investigation hours worked or years worked. Connecting with the licensing agency to determine what justifies verifiable proof ahead of time will make this process easier when going through the process.

It is very important to keep documentation related to your investigation experience.  Many investigators don’t keep this information and it can be impossible sometimes to provide documentation if records are lost or companies that someone works for not longer exist. 

If you are not a private investigator or you do not have the necessary experience to open a private investigation agency, I have written how to get hired by a private investigation agency with no experience. 

Regardless of your state’s requirements for starting a private investigation business, you will need to gain some experience (if you don’t have it) and learn the laws that directly and indirectly affect the private investigation industry. 

Gaining experience will allow you to provide a variety of services to your future clients and help you determine what areas of the private investigation industry you may want to specialize in.  Below are a few resources that will help you get started with your investigative experience.

Here are a few ways to gain experience (though this may not be recognized by licensing institutions):

• Take a private investigation course through a college
• Take Criminal Justice coursework through college
• Review private investigator study exam material 
• Read books on private investigations
• Take an investigation course created by private investigators
• Work for an investigation company
• Intern for an investigation company
• Watch Youtube videos from Private Investigators
• Listen to Podcasts from Investigators
• Attend Investigation Seminars

Determine the Name of Your Investigation Business

As you go through the process of applying for your private investigation agency, you will likely need to provide the name of your business. 

Write a list of possible names for your business that you like.  Once the list is created you will want to check a couple of places to make sure the name isn’t taken.

I have written specifically about private investigation business names here if you would like more information about that topic. 

When thinking of a business name, consider a few things.

Will you have what you specialize in within your company name?

Here are some examples:

• Omega Investigative Servies (Clearly an Investigation Company)
• Omega Insurance Services (Could be an insurance company or an investigation company for insurance companies)
• Smith Detective Agency (Combination of a last name and the type of business)

I think you get the idea. It may be worth making your business offering obvious to potential clients that are looking for investigative services.

Checking for Trademarks on Your Private Investigation Name

You want to make sure that the name you want for your business is not already taken so you will want to check the United States Patent and Trademark Office website.

According to the United States Patent and Trademark Service, a trademark is, ” A trademark can be any word, phrase, symbol, design, or a combination of these things that identifies your goods or services.”

A trademark can be any word, phrase, symbol, design, or a combination of these things that identifies your goods or services.

-United States Patent and Trademark Service

Check to See if the Website Domain is Taken

When I finally determined a business name for my company (Fortified Investigative Services), I searched the internet to determine if it had been taken. 

I thought FortifiedInvestigativeServices.com would be good and it was not taken. I then settled on Fortifiedis.com as I felt it would be easier for people to remember or for me to tell someone what it was. 

Go to Godaddy.com and search for variations of your business name. If for some reason it is not available, go to the website to see if it is actively being used. 

For instance, if SmithInvestigationService.com is not available, go to the site to see if someone actually is using it. If someone is already using it, then you may want to reconsider that name.

What Type of Business Structure Will You Have

There are many business structures that are available for businesses.  Typically in my experience, I have only observed two models. The two models generally speaking for new private investigation agencies are the Sole Proprietor and the Limited Liability Company (LLC) or an S Corp.

Please note that I am not an attorney and this is not advice as to which direction to take with a business structure. Refer to attorney help if you have concerns as to which type of business structure to start your business with. 

Sole Proprietor Investigation Agency

The sole proprietor business structure is one of the easiest business models to begin with however it also carries the most liability.  When discussing liability I am referencing if you are sued for any reason.  If you are sued, your business and personal assets are combined as a sole proprietor.  Essentially the individual suing you can pursue your personal assets.

Under a sole proprietorship, you will own 100 percent of the business, all of its assets and liabilities. 

Of the 31.7 million small businesses in the United States as of 2017, 81 percent, or 25.7 million have no employees (considered nonemployers). – U.S. Small Business Administration Office of Advocacy

Also, 86.6 percent of Sole Proprietorships are nonemployers – (Have no employees).

Limited Liability Corporation for Your Private Investigation Agency

Another commonly used business structure is the Limited Liability Corporation.  This structure provides the liability protection of a corporation without formalities of a corporation. The taxing is the same as a sole proprietorship or partnership.

It will cost a little more to get set up and will require more formal behavior as a business than a sole proprietorship.

S-Corporation for Your Private Investigation Agency

This is a less common structure and is usually seen with a large agency. Profits and losses can be added to a shareholder’s personal tax return without getting taxed twice. 

S-Corporations can not deduct health insurance, travel, and entertainment like normal corporations can do.  

It is more expensive to set up than a sole proprietorship and requires shareholder meetings and keeping minutes.

If you would like to set up a business entity, here is a site that can do it for you if you need assistance.

State Requirements and Taxes

Your state will likely require that you obtain some sort of general business license.  In Washington state, the license is called a Master Business License. The city you conduct business in will likely require you to let them know so you can be taxed appropriately.

Insurance and or Bonds for Your Investigation Agency

As previously stated each state will have different requirements in regards to the type of insurance or bond that is needed.  In most cases, you will need 1 million in omission and errors insurance.  

The price for this will vary, but for some point of reference, you can expect to pay no less than $750 a year for this insurance  This is a small price to pay to protect you in case something goes wrong with an investigation.  The state of Washington will not renew a private investigation agency license without proof of insurance and I know many other states will not as well.

A Surety Bond is also something that many states will require a private investigation agency to obtain. A bond can be purchased for very very little.  SuretyBonds.com indicates that it will cost approximately $100 for a $10,000 bond.

The difference between a bond and omission insurance is that if a claim is made against your company for not doing something or doing something wrong (from the client) and the insurance company will pay the claim without expectation of reimbursement from the investigation company.  The bond is designed to protect the consumer while the errors and omissions insurance is designed to protect the principal (investigation company).

This video explains Error and Omissions Coverage.

This Notary explains the difference between errors and Omission and a Surety Bond.

What Investigative Services Will You Offer?

In order to determine what type of clients you would like to attract to your business, you must first determine what services you will offer.  Hopefully, by this step, you have the experience needed to perform the services you are selling.

There are several categories that private investigators typically fall into.  The following are a few examples of private investigator career paths:

1.)    Insurance Fraud Investigator

2.)   Domestic Investigator

3.)   Criminal Investigator

4.)   Missing Person/Skip Trace Investigator

5.)   Computer Forensic Investigator

6.)   Defense Investigator

There are many different services you can provide as a private investigation agency even though you may focus primarily on one thing.

There are many companies in existence today that do not specialize in any one thing.  You will find that some companies provide 20 to 30 different services. 

This may work for many companies however I would suggest focusing on about 10 different services for your company that complement each other.

An example of the services an Insurance Fraud Investigator performs include the following:

•   Scene Investigations (ie: slip and fall, vehicle accidents)
•   Recorded Statements
•   Alive and Well Checks
•   Activity Checks
•   Surveillance
•   Skip Tracing
•   Background Checks

How do these 7 things complement each other?  Each one of these services may lead to another service.  For example, if a recorded statement is taken from a claimant and the statement reveals something that contradicts something with the individual’s claim, the client may add a surveillance assignment to the case.

If you conduct an activity check on a claimant and determine something of importance for the client, a recorded statement could be assigned or future surveillance on the individual.

Having a smaller number of services allows you to become viewed as someone that is specialized and possibly better than the company that offers more services but isn’t an authority at anyone one thing. 

The more often an investigator performs specific investigative duties, the more competent the company and the investigators will become.

Create a Business Plan for Your Investigation Agency

While this is not needed to start a private investigation business, it is recommended that you consider creating one.

A business plan can do a few things for you as a business owner like the following:

Show How You Are Taking The Investigation Business Seriously

If you take the time to truly treat your investigation business like a business and not a hobby, you have a better chance of creating a meaningful business that supports you and your family.  Many investigators slip into hobby mode and don’t fully strategize or put the work in to make something meaningful with their investigation agency.

Establish Goals and Milestones to Reach 

With anything in life, if you don’t have a goal to point towards, you will float around aimlessly with no direction.  You will want to set financial milestones, personnel milestones, and client milestones to help you reach your goals.

Understanding Your Competition

One of the first things leading up to creating your investigation agency is to conduct competitor analysis.  This means you will want to understand who your main competitors are in your area.  

How can you become better than your competitors if you haven’t taken a look at who they are and what they do?  

Determining Your Financial Needs

When you are first starting off in the investigation business, it is important to determine what your personal and business financial needs are. You are likely starting off by yourself. You will be doing marketing, investigative work, and administration work. And if you don’t have an accountant, you may be doing that work as well. 

How much do you need to make to pay your personal and business bills?  How much will you need to charge for your services?  How many hours will you need to work at that rate to cover your costs?  

This is important information to determine ahead of time as it will shape how you run your business.

Document a Marketing Plan

What is going to be your plan to market your services? Who are you marketing to? How will your reach your ideal customer?

It’s important to think this through as your business is getting started.  You don’t want to wing it.

Here is some more information about writing out a business plan.

Personal Mail Box or P.O. Box Mailing Address For Your Business

If possible, as an investigation business, it can be a little dangerous to have an address that goes to a physical location like your house or an office. If someone disgruntled wants to find you, you will be making it easy for them.

Setting up a personal mailbox or P.O. Box for your business is a safe way to keep your actual physical business location difficult to find. 

Any business correspondence can be sent to that mailbox without revealing your actual location. 

Open a Business Bank Account For Your Investigation Agency

Opening a separate bank account for your business income will help keep from muddling different income streams together.

I have found that a sole proprietor doesn’t need much to open a business account.  A corporation however will need articles of incorporation paperwork and some other things in most cases to create a business bank account.

Connect with a bank near you and find out exactly what they will need from you to create a business bank account depending on the formation of your business.

Office Location for Your Agency

When launching an investigation agency it may not be prudent to pay rent on an office that you will be spending very little time at.  Most investigation companies begin out of their homes or shared workspaces.

If you are marketing yourself outside of the office or working on case files, it is highly recommended you first start your business from your home. 

You can do all the investigation work from your home office while not spending extra money and possibly saving money during tax time as your in-house office can be a write-off.

I have written more about the pros and cons of a home-based office or a physical office location for your investigation business here.

Private Investigation Agency Startup Cost

The start-up cost for a private investigation business will vary depending upon how much the licensing and insurance/bonds add up to be. 

The cost is also dependent upon how much equipment and supplies you have already that you don’t have to go out and buy.

Here is some of the equipment you will need when starting an agency:

• Licensing
• Insurance/Bond
• Video camera
• Computer
• Subscription Databases
• Digital Camera
• Printer
• Audio Recorder
• External Hard Drive
• Covert Cameras
• Vehicle Tint
• Business Cards 
• Brochures
• Investigation Business Website
• Memory Cards
• Personal mailbox or P.O. Box
• Tri Pod
• Mono Pod
• Video editing software or subscription

I have written about the cost of starting a private investigation business in detail here and what the cost was for me to give you some perspective. 

Additional expenses will always pop up so you will need to anticipate that.

Depending on the equipment you already have you can easily need to spend $2,000 to $4,000 to get a business started. This is actually a pretty reasonable cost to start a business.

I have created some investigation templates that are for sale if you are interested in this affordable bundle.

Marketing Your Private Investigation Business

When writing your business plan, marketing your business needs to be at the forefront of your mind. How will you get the word out about your business and build relationships with long-term clients?

You should have determined who your ideal client is to serve. Once you have determined that, you will need to determine how you will connect with them.

• Will you visit the attorney’s offices?
• Will you run ads on Google or Facebook?
• Will go to trade shows?
• Will you leverage search engine optimization from articles on your website?
• Will you seek subcontract work?
• Will you try to work for the court system?
• Will you try to work for insurance companies? How will you contact the decision maker?

These are just questions to consider as you begin thinking about marketing and building relationships with future clients.

Join a Private Investigation Association

One of the best things I did after starting a new private investigation business was to join a private investigation association.  I joined WALI, which stands for the Washington Association of Legal Investigators. 

Some of the great things about an association is being able to reach out to veteran investigators for answers or recommendations if you can’t find the answer. 

You will find out that no matter how much experience you have in the private investigation industry, someone always knows more.  In addition, you are placed in the association directory and are given discount pricing on private investigation seminars held by your association.

Continuing Your Education as a Private Investigator

It’s easier said than done but the importance of continuing your education cannot be emphasized enough.  This is especially true after you start a private investigation business.  Go to seminars and take courses in things that you can add as services.

You will find that this can be difficult as you try to work as much as possible while maintaining some sort of work-life balance in the private investigation industry.  Nevertheless, you should attend seminars at the very least whenever possible.

Network in the Private Investigation Industry

There were many days at the beginning of my business that I would not have worked if I had not built relationships in the investigation industry.  Whether it be a client, potential client, or former coworker, it is without a doubt in your best interest to build relationships.  If you build a good reputation, people will have no problem coming to you when they need help with work.

I wish you much luck in your investigation endeavors and your business.  Until next time.