Handling charges are taxable in California and so is shipping if you put the two together into a “shipping and handling” line on your invoice. Separate these two charges if you want your shipping charges to stay tax-free.
If you charge your customers a flat rate for shipping, then the difference between your flat charge and the true cost of shipping is taxable for each order. So, really, just don’t do this. It will give you a headache for sure.
Delivery charges for orders you haul to your customers with your own vehicle may be subject to sales tax if the order is paid for on receipt at the customer’s address. If the customer has taken possession at your location (i.e., prepaid), the delivery charges are not subject to sales tax.
If you are feeling dazed and confused about now, here’s a guide to when to charge sales tax on shipping costs in California in a nutshell: good record keeping and clear invoicing can help you avoid the need to charge sales tax on your California shipments, in most instances.
