It's also an incredibly fun way to make some pocket change and meet people. Most cities require a street performer license to legally busk, and below are links to the paperwork required for the most populated cities in the US, plus some additional popular busking locations.
Each city will have it's own rules, and you should look them up if you are unclear about anything. By and large, these two guidelines will keep you out of trouble once you have your license:
1) Don't block the public pathwayNumber 1 is self explanatory. Don't block a sidewalk or entrance to a business. Period. You can and will be fined hefty sums.
2) Play an acoustic instrument, keep percussion to a minimum volume
For number 2, playing an acoustic instrument keeps your noise to a reasonable level. Some cities actually require additional permits if you use an amplifier.
In addition, should a police officer feel you are too loud, you can be fined and/or asked to move. Bucket drums are the number one culprit of busking noise complaints; a cajon and foot-strap bells are a great cheap alternative. Some cities have banned drums altogether from street performances.
Now, the minimum distance to move following a complaint is often defined as 2-3 blocks, depending on your city. Remember that busking income is supremely based on location. Once you find a profitable patch of concrete, you won't want to move, especially due to noise complaints.
I also recommend playing an acoustic instrument because if you break out a bunch of gear (amp/chords/pedals/whatever) it looks like you do not need money. People will (not) donate accordingly. Again, some cities have banned amplifiers so keeping it acoustic is the way to go. In addition, police are allowed to confiscate your amp if you break a city ordinance.
Finally, many cities require an additional permit if you sell a CD or any kind of merchandise. Play just for tips and you should be good.
For each city, call ahead to see exactly what is needed to obtain your permit. Usually the most you will need is a government ID, permit application, two 2×2 inch face photos (without hats/sunglasses, obviously), and permit fee. If you play as a group, check to see if your group can get a license or if each individual member needs their own license.
This is general information, not legal advice. If you are unsure about anything ask a local music lawyer in your town.
Chicago: Two separate permits, one for the city and one for Chicago Transit Authority (CTA) platforms. To play in the city, there is a $100/year fee, forms must be filled out in person (City of Chicago). For the CTA locations, busking is allowed on four platforms downtown. Only those four specified platforms, or you will end up with a ticket and court date. The permit to perform is only $10/year and must be filled out in person at the CTA main office (CTA Main Office).
New York City: New York City has a list of official busking locations by neighborhood. Speak to your police office's community affairs rep to pick a location and fill out the permit. It costs $45 for the first day and $5 dollars for each additional day. Spots fill up fast, be sure to call ahead to make sure your police precinct's community affairs employee will actually be in the police office when you visit. You will have to meet with the community affairs employee so they can accept your application and let you know which locations are available. You will probably need to plan your visit according to their work schedule. Bring this form and a money order from the post office.
Nashville: Nash-Vegas has one of the more strict busking policies in the US. No amps, no seats/stools, no saxophones, and no drums are allowed. Street permits are $25 for up to 10 days, or $100/year and additional permits are needed to play in a park. Fill out this form and take it to the Davidson County Clerk's office.
Los Angeles: Street performing is legal in LA. Since foot traffic in LA is pretty minimal, Venice Beach is the go-to spot. Stay on the public walks and you'll be fine. If you want to busk at Santa Monica pier the license is $37/year and details are here. Busking at Hollywood Universal Citywalk is illegal, but they hire street performers. In the past they have hired musicians to play 45 minute sets for $250, although I'm not sure about the current rates. Full details for Universal Citywalk are here.
San Francisco: The city of San Francisco allows street performances. However, there are special conditions for busking at Fisherman's Wharf. For the Wharf, you have two options. Option one is free (no permit required), and allows you to busk at one of the 12 designated performance areas on a first-come first serve basis when the performance area is not reserved by a permit holder. Option two requires a permit ($50/month or $500/year), insurance coverage ($250/year) and badge fee ($25). Performers with permits may participate in a monthly scheduling meeting and reserve the prime locations and times for their performances. The time slots at each performance area are 2/3 full for the month after reservations are complete, which means unlicensed performers must vie for the remaining 1/3 available time/space. A full explanation of the system may be found here. Check out the license application, insurance application, and performance locations.
Boston: Boston proper does not require a permit to busk. Two separate permits are required for MTBA and Harvard Square performances. For select Massachusetts Bay Transit Authority (MBTA) station areas, a $25/year permit is required to perform. To obtain the permit, fill out the application and call the TRA at (617) 482-2525 to make an appointment to deliver your paperwork on Monday, Wednesday or Friday between 9 AM and 3 PM. You will need to bring 2 forms of ID, a piece of mail post-marked within the last 30 days, and a money order for $25. Full details and performance locations are available here. Performing at the MTBA is granted on a first-come first-serve basis, with a 7am lottery at the more popular locations. Busking in Harvard Square requires a $40/year permit. Take your application to the Cambridge Arts Council located at 344 Broadway, 2nd floor. Full details here.
Boulder: Musical street performances are legal in Boulder. The Pearl Street Mall draws some of the most talented street artists in the world, and your level of success here is a great way to see how you stack up to the competition.
Phoenix: Downtown Phoenix is great for busking, especially on the first Friday and third Thursday festival nights. There is no permit required. Tempe, AZ (ASU territory) also allows un-amped performances everywhere except public parks. Mill street is a well-known haven for buskers. If you would like to play with an amp, every Thursday on Mill street is "buskers night" and you can apply to have a reserved spot complete with power outlet. Apply here.
New Orleans: Since Katrina hit, it seems that permits are not enforced so much anymore. The scene here is changing and there are currently a couple ordinances (scroll down a bit) being voted on that will impact the future of busking in the Big Easy.
San Diego: The areas on the waterfront where you are free to busk as you please. To play in Balboa Park you need a permit. The park admin building holds a lottery at 10am the first Saturday of the month for permits. The permit is free, but there are a limited number of lottery tickets so get there early. This writeup details the process nicely.
Your city not listed below? The best place to find info is the police and county clerk's websites. Be sure to help out others and share your city's info in the comments.
[The cities have links to each form, which I can fill out/complete if the article is accepted, eventually it will read as this article... I run keepstrumming.com and think that your community would find the information helpful and relevant.]
Thanks for your consideration!