It is a big deal, running a business requires following the law. There is no special "startup" case where you're allowed to be loose on your obligations.
Accurate payroll costs somewhere between $50-100 per month per employee with dozens of great vendors available. This is an incredibly trivial cost (especially compared to the fines for breaking these laws) and means there's no excuse to not have things in order. If you can afford a salary, you can afford accurate payroll and bookkeeping - otherwise you have no business being in business.
"It is a big deal, running a business requires following the law."
Again - I would suggest that maybe you have never started a company or done payroll, or paid anyone yourself.
It is not required to have 'payroll' to pay individuals for services rendered, nor have properly managed books.
I once created a 'side company' to manage some IP. The company had no employees. All participants (there were five of us over time, but only three at any given time) - were paid as consultants. Two of us had equity.
This arrangement was far superior than having payroll for this particular situation.
You're right, in that case. In the case of contractors invoicing is normal and legally acceptable. In the use case you mention here, contractors are appropriate and legal.
It is, however, illegal to pay employees like contractors. When you are hired to work full time for a start up you almost always meet the test of being an employee. The author of this article did. It IS therefore illegal to not give her a paystub or ask her to invoice.
This is generalizable to start ups. I've worked for start ups. Every time I was hired as an employee and treated as one. It would have been a red flag and illegal for them not to pay me as an employee.
Again, everything you're saying for the most part is true if you're talking about paying IC's. Where you are demonstrably wrong is assuming that you can treat start up employees as ICs You can't. Therefore doing what you're claiming is "normal" is actually illegal on many levels.
I've started several companies with my own employees and I've always paid them correctly and on time with proper payroll and accounting. That's because it's the right and legal way to conduct business.
If you're talking about instances where you use contractors instead, then that's an entirely different scenario.
As long as you treat employees and contractors separately and properly, there are no issues - but having employees and paying them like contractors is illegal. Invoicing is not a replacement for payroll.
I know that things are different in Canadia, but in the US you appear (up thread) to be conflating W2 employees and 1099 contractors. Yes, you can pay the latter as vendors - because that's what they are. No worries about vacay, health benefits either.
I would suggest that your little side gig did not provide you panoptic insight.
Accurate payroll costs somewhere between $50-100 per month per employee with dozens of great vendors available. This is an incredibly trivial cost (especially compared to the fines for breaking these laws) and means there's no excuse to not have things in order. If you can afford a salary, you can afford accurate payroll and bookkeeping - otherwise you have no business being in business.