We are charging sales tax on the parts but not sure about the labor, and it changes by invoice type
In California, tax generally applies to the parts and materials on a job but not to the labor to install or repair something, but that split depends on exactly what kind of job it is. A repair invoice for fixing an existing furnace is treated differently than an invoice for installing a new one that becomes part of the building, and ServiceTitan or Housecall Pro invoice templates do not automatically know the difference unless someone sets them up that way.
Most shops set up one tax rule in their invoicing system years ago and apply it to every job type since, whether it is a repair call, a full install, or a maintenance agreement, without checking whether each one is actually taxed the same way under California rules.
A California sales tax audit typically pulls three years of invoices, and if labor was taxed on jobs where it should not have been, or materials were left untaxed on jobs where they should have been, the state assesses the difference across every invoice in that window, which for a shop billing a few thousand jobs a year commonly runs from ten thousand to well over fifty thousand dollars in back tax, penalties, and interest.