> When a company has just started, they may have not set this up.
The correct (and only non-criminal) order of operations is (1) figure this out, (2) start hiring employees.
If you can't calculate withholdings and all those other things that get listed on a paystub correctly (which is the only thing that would stop you from generating a paystub), you are breaking the law (civilly and perhaps criminally under federal and state tax and other laws, that require the withholdings, deductions, etc.)
If you don't (in California, where this occurred) have posted paydays with at least the legally specified frequency, or don't pay employees on those paydays, you are breaking the law (criminally, under state employment laws, as well as possibly civilly.)
So, if you haven't figured this out, you have no business hiring employees.
"When a company has just started, they may have not set this up. The correct (and only non-criminal) order of operations is (1) figure this out, (2) start hiring employees."
This is false.
For any of you interested - here is the actual law in California:
It's perfectly normal and very common to submit invoices for services rendered that you claim on your 1099.
There's no way you could have run a business without grasping how common paying people via invoicing is.
Some major companies - such as Wordpress - tend not to hire people for a while. For the first little while, they have you work on 'projects', remotely, until they decide they want to bring you on long term. The founder indicated that they pay them for the work and only bring some of them on. Obviously, they are getting paid via invoicing.
Startups will often bring someone on for a project/consulting, and then decided to keep them full time. This is not uncommon. It's also happened to me.
I'm going to guess that most of you commenting have actually never run a business, paid an invoice, or submitted and invoice.
Independent contractors and employees are two different things.
It's quite legal to hire people to serve in roles that are not, under the tax code, employees but independent contractors, without being able to handle payroll. But that's not a status that a company can freely choose independent of the nature of the work, it's a status that is controlled by the nature of the work by rules set out in the tax code.
You seem to think that employees hired as employees can elect invoicing and 1099 status if the company isn't up to handling employment law requirements, order that the company can hire people as employees and then treat them as contractors until it is ready to handle employment law requirements. Neither is the case, and either is a situation in which the company violates many aspects of the law (and more if it doesn't pay timely on a regular schedule but instead waits for invoices.)
You seem to persist in not understanding the difference between a w2 and a 1099.
fyi, as alluded to elsewhere in this thread, the government deems payroll taxes to be paid by the employee on the date he or she receives his or her share of the paycheck. At that point, the business is holding the taxes on behalf of the government. Officers of the company are regularly held personally liable for unpaid payroll taxes. The irs and state tax agencies choose a "fuck you, pay me" approach to these taxes. You should probably not screw about with them, but to each his own...
The correct (and only non-criminal) order of operations is (1) figure this out, (2) start hiring employees.
If you can't calculate withholdings and all those other things that get listed on a paystub correctly (which is the only thing that would stop you from generating a paystub), you are breaking the law (civilly and perhaps criminally under federal and state tax and other laws, that require the withholdings, deductions, etc.)
If you don't (in California, where this occurred) have posted paydays with at least the legally specified frequency, or don't pay employees on those paydays, you are breaking the law (criminally, under state employment laws, as well as possibly civilly.)
So, if you haven't figured this out, you have no business hiring employees.