Any individual or organization may be licensed as a private investigator. In the United States, forty-two states and the District of Columbia have licensing requirements for private investigators. The purpose of licensing basically is to regulate the industry and to keep the unqualified out of the profession.

Under the state licensing authority rules, there are specific criteria that must be met to qualify for a license. Applications for class A, B and C licenses are given to the director in writing and under oath. Once these applications are received, the director forwards it to the bureau of criminal identification and investigation. If the director is satisfied with the applicant an examination time and date is set up. If the applicant is found to be appropriate, they are issued a class A, B or C license according to the requirements.

Different States have a discrete set of guidelines for issuing licenses. The state of Indiana accepts two years of experience in the field. In Florida, three years of investigative knowledge with a government agency, or as an intern-employed full time by a licensed investigative agency are compulsory. Experience as a police officer is not adequate; there should be at least three years of genuine investigative experience documented. A degree in criminal justice or a related field is not sufficient by itself. Connecticut recognizes ten years experience as a sworn police officer. New York, Kansas and Wisconsin applicants are required to pass a written exam. The state of Louisiana entails a 40-hour class and written examination for applicants.

Active police officers may encounter problems, other than department policy, when working in private practice. There is a conflict of interest statute thus prohibiting a police officer from holding a private investigators license.

Obtaining and maintaining the license, once approved, can also involve purchasing private investigators liability insurance, general business liability insurance or posting a surety bond. California and South Carolina require a $10,000 bond. Florida requires a $300,000 liability insurance policy obtained from a state approved agency. Minnesota recognizes an indemnity bond, liability insurance policy or letter of credit from a financial institution. Indiana does not have any insurance or bond requirements.

States that require a private investigators license have an enforcement program and penalties for unlicensed activities. There are many cities and counties that require local licenses.