How to Start a PI Business in Colorado (2026)

Last updated: February 25, 2026

Colorado is one of the few states in the country that does not require a state license for private investigators. The state’s PI licensing program through DORA (Department of Regulatory Agencies) was sunset and discontinued effective August 31, 2021, after Governor Polis vetoed the continuation bill in 2020. This means anyone can legally offer private investigation services in Colorado without a state-issued PI license.

However, “no license required” does not mean no requirements. You still need to form a business entity, carry appropriate insurance, understand Colorado’s privacy and surveillance laws, and maintain professional standards. As a PI business owner myself, I can tell you that credibility, insurance, and legal knowledge are what separate serious investigators from amateurs – especially in a state without licensing. This guide covers everything you need to start and operate a legitimate private investigation business in Colorado.

Private Investigator Requirements in Colorado at a Glance

Requirement	Agency	Cost	Timeline
State PI License	N/A	Not required	N/A
LLC Formation	Colorado Secretary of State	$50	Instant (online)
Federal EIN	IRS	Free	Immediate (online)
General Liability Insurance	Private insurer	$800-$2,000/year	Same day
Professional Liability (E&O)	Private insurer	$500-$1,500/year	Same day
Sales Tax License	Colorado Department of Revenue	Free	Same day (online)
Local Business License	City/county clerk	Varies	Varies
Workers’ Compensation	Private insurer	Varies by payroll	1-3 days
Concealed Carry Permit (optional)	County sheriff	$100-$200	30-90 days

How to Start a Private Investigation Business in Colorado (Step by Step)

Step 1: Develop Your PI Skills and Knowledge

While Colorado does not require a license, professional competence is critical. Clients, attorneys, and insurance companies will evaluate your qualifications before hiring you. Recommended background and training:

Investigation experience: Prior law enforcement, military intelligence, insurance investigation, or legal investigation experience is highly valued
Professional training courses: Organizations like ASIS International, NALI (National Association of Legal Investigators), and state PI associations offer training
Legal knowledge: Thorough understanding of Colorado privacy laws, wiretapping statutes, trespass law, and rules of evidence
Database research: Training in public records research, skip tracing, and online investigations
Surveillance techniques: Mobile and stationary surveillance, counter-surveillance, and documentation
Report writing: Clear, factual, admissible reports are the foundation of professional investigation work

Professional associations: Consider joining the International Intelligence Network (Intellenet), ASIS International, or your local state PI association for networking, training, and credibility.

Step 2: Form Your Business Entity

An LLC is especially important for PI work because it creates a legal barrier between your personal assets and potential lawsuits arising from your investigations.

Step 3: Learn Colorado Surveillance and Privacy Laws

Understanding Colorado’s legal framework is critical for PI work. Key laws that affect investigators:

Recording and Wiretapping

Colorado is a one-party consent state for recording conversations. You can legally record a conversation you are a party to without the other person’s consent.
You cannot record conversations you are not a party to without a court order.
Video surveillance in public places is generally legal in Colorado. There is no expectation of privacy in public areas.
GPS tracking: Colorado law restricts the use of GPS tracking devices. Do not place a tracker on someone’s vehicle without proper legal authority.

Trespass and Privacy

Trespass: You cannot enter private property without permission for surveillance purposes. Photograph and observe from public areas only.
Stalking laws: Repeated surveillance of the same person could be construed as stalking. Ensure your activities are within the scope of a legitimate investigation.
Colorado Privacy Act (CPA): Be aware of data privacy obligations when collecting and storing personal information.

Firearms

Concealed carry permit: Available through your county sheriff. Requires background check, training course, and application fee ($100-$200). Not required for PI work but some investigators choose to carry.
Open carry: Legal in Colorado except in Denver (which bans open carry).
Note: Being armed during an investigation can create legal complications. Most professional PIs avoid carrying on routine assignments.

Step 4: Get Business Insurance

Insurance is essential for PI work, both for legal protection and because clients will require it:

General liability insurance: Covers bodily injury and property damage claims. Typical cost: $800-$2,000/year.
Professional liability / Errors and Omissions (E&O): Covers claims arising from your professional services – incorrect findings, missed information, or negligent investigation. Typical cost: $500-$1,500/year. This is the most important policy for a PI business.
Commercial auto insurance: Required if using a vehicle for surveillance and investigation work.
Workers’ compensation: Required if you hire any employees or subcontract investigators.
Cyber liability: Consider if you handle sensitive digital data or conduct cyber investigations.

Step 5: Set Up Your Operations

Equip your PI business with the tools of the trade:

Surveillance equipment: Quality camera with telephoto lens ($500-$2,000), video camera, covert recording devices (within legal limits)
Database subscriptions: TLO, IRB Search, Tracers, or similar investigative databases ($75-$300/month)
Vehicle: Reliable, inconspicuous vehicle for mobile surveillance
Office setup: Home office is sufficient to start. Secure file storage for case files and evidence.
Report templates: Standardized investigation report formats for different case types
Service agreements: Written contracts that define scope, billing, confidentiality, and liability terms

Step 6: Register for Taxes and Permits

Sales tax license: PI services are generally not subject to sales tax in Colorado as they are considered professional services. However, obtain a sales tax license through Colorado Business Express if you sell any tangible products.
Local business license: Check with your city or county clerk
Home occupation permit: If operating from home, some cities require a home occupation permit

Cost to Start a Private Investigation Business in Colorado

Item	Cost	Notes
State PI License	$0	Not required in Colorado since 2021
LLC Formation	$50	Colorado Secretary of State
EIN	Free	IRS online application
General Liability Insurance	$800-$2,000/year	Bodily injury and property damage
Professional Liability (E&O)	$500-$1,500/year	Covers investigation errors and claims
Surveillance Equipment	$1,000-$5,000	Camera, video, recording devices
Database Subscriptions	$75-$300/month	TLO, IRB Search, Tracers, etc.
Concealed Carry Permit (optional)	$100-$200	County sheriff application
Professional Training	$200-$2,000	Investigation courses, legal seminars
Professional Association Membership	$100-$500/year	Intellenet, ASIS, state association
Local Business License	$25-$200	Varies by city
Periodic Report (annual)	$25/year	Required to keep LLC active

Estimated total startup cost: $3,500-$12,000 (first year, excluding vehicle)

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Frequently Asked Questions

Do I need a license to be a private investigator in Colorado?

No. Colorado does not require a state license for private investigators. The state’s PI licensing program through DORA was sunset and discontinued effective August 31, 2021, after the Governor vetoed the continuation bill. Anyone can legally offer PI services in Colorado without a state-issued license.

Why did Colorado stop licensing private investigators?

In 2020, Governor Jared Polis vetoed HB 20-1207, which would have continued DORA’s PI licensing program. The decision followed a Sunset Review that questioned whether state licensing was necessary to protect the public. The licensing program officially ended on August 31, 2021, and all previously issued licenses are no longer valid or required.

How much does it cost to start a PI business in Colorado?

Without a state licensing requirement, startup costs are relatively low – approximately $3,500-$12,000 in the first year. Major expenses include LLC formation ($50), insurance ($1,300-$3,500/year), surveillance equipment ($1,000-$5,000), and database subscriptions ($75-$300/month).

Is Colorado a one-party consent state for recording?

Yes. Colorado allows one-party consent for recording conversations. You can legally record a conversation you are participating in without the other person’s knowledge or consent. You cannot, however, record conversations between other people that you are not a party to.

Can I carry a firearm as a PI in Colorado?

You can obtain a concealed carry permit through your county sheriff ($100-$200, requires background check and training). Open carry is legal in Colorado except in Denver. However, being armed during routine investigations can create legal complications, and most professional PIs avoid carrying on standard assignments.

What insurance do I need for a PI business in Colorado?

At minimum, carry general liability insurance ($800-$2,000/year) and professional liability / E&O insurance ($500-$1,500/year). E&O coverage is especially important for PI work as it protects against claims of negligent investigation, incorrect findings, or missed information. Most attorney and insurance company clients require proof of both policies.

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About the Author

Robert Smith has run a licensed private investigation firm for 8 years from the Florida-Georgia state line - where he learned firsthand how wildly business licensing rules differ between states just miles apart. He personally researched requirements across all 50 states and D.C., reviewing hundreds of government sources over hundreds of hours to build guides he wished existed when he started. Not a lawyer or accountant - just a business owner who has done the research so you don't have to.

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