Portland’s proximity to Vancouver, Washington, creates opportunities as well as challenges for contractors.

Panelists discussed those during a virtual Builder Breakfast event hosted by the Daily Journal of Commerce on Thursday. Insurance, tax and legal experts provided a general understanding of what contractors should consider when pursuing and conducting out-of-state work, and shared some tips and tricks.

When an Oregon contractor is considering work north of the Columbia River, the first step should be to reach out to the Southwest Washington Contractors Association (SWCA) as well as the Greater Vancouver Chamber of Commerce, Schwabe, Williamson & Wyatt shareholder Paige Spratt said.

To qualify for a contracting license in another state, a contractor would need general liability insurance, some type of license bond and workers’ compensation, Anchor Insurance & Surety producer Drew Roddan said. A general liability policy can be used across states, so a firm can use what it already has. The license bond must be state-specific.

Workers’ compensation is a little trickier, Roddan said. Oregon and Washington reciprocate, meaning if an Oregon-based contractor is doing work in Washington, it can use its Oregon coverage. If a contractor is setting up a permanent presence, however, it will need to get a specific policy for that state.

If a client expresses interest in working in another state, Aldrich partner Chad Emmert seeks to learn about the type of work the firm would be doing, any risks, and what it’s seeing in the industry, he said.

The panelists agreed that setting up licensing to contract in that state should be the first step before bidding on a project or marketing the company as a contractor for that state.

Contractors also should talk with their public accountant about any tax implications tied to any work performance and understand those implications, they said. Washington has a sales tax, while Oregon has income and excise taxes to be aware of, Emmert said. Also, some counties have taxes, such as the Oregon Metro tax for Washington, Clackamas and Multnomah counties.

When a contractor bids on a project, any taxes should be included in that bid. It is important to know which state and local taxes will apply, Emmert said. Contractors should know the percentages and how that will impact the bid price. Contractors should work with their professional services team in advance and talk through impacts before starting the bid process.

Contractors should review contracts and subcontracts with their legal team, understand any deadlines, be familiar with notice requirements in contracts, and maintain the insurance policy, the panelists said.

If buying property in another state for a development, Spratt suggested speaking with a land use lawyer beforehand, because land use laws differ by state. It may make sense to get a separate insurance policy for that development, but firms should speak more with their insurance agents.

If a contractor is thinking about pursuing work in a different state, the firm should reach out to its professional services team early on about tax planning, insurance policies, and trends in the industry.