Changing Employees to Vendors in QuickBooks

In QuickBooks, you can use name types to classify the people and companies associated financially with your business. Using the predefined roles, such as employee and vendor, provides business owners with access to automated processing, such as payroll and payment transactions through the QuickBooks system. If you have QuickBooks set up to use these roles, you may find at times that you need to change the name type associated with an individual or organization.

QuickBooks facilitates preset name types for common roles associated with the book-keeping activities of most companies. These include employee, customer and vendor. The employee name type is designed to reflect individuals working for the organization on an ongoing basis, with taxes payable on their income. The vendor type is for any person or company from which the organization purchases services or goods. The customer type is for people or organizations paying the business for goods or services. QuickBooks also provides the Other Names category for cases where none of the preset types are appropriate.

A typical reason to change the name type in QuickBooks could be where an employee is becoming a freelancer, and is therefore going to be reclassified as a vendor. Similarly, a freelancer listed in QuickBooks as a vendor could be more effectively described as an employee, if they were becoming permanently employed by the company. Unfortunately, QuickBooks does not provide the ability to change employee, customer or vendor types. The only case where you can change a name type is when the existing type is Other Names, in which case you can change them to an employee or vendor.

Since the QuickBooks system does not allow you to change from employee to vendor, to implement this change you can either delete the original employee name and then create a new one of the vendor type, or can make the existing employee name inactive, before creating a new one of the vendor type. Before proceeding, make sure you have a copy of any data associated with the existing employee. To remove the employee, you need to navigate first to the Employee Center, where the name is currently defined, right-click and delete it or make it inactive. To create the name as a new vendor, you can select the Vendors icon, choose "New Vendor" and enter the name together with the currency, balance and address information.

Changing an employee to a vendor will change the automated processing you can access with regard to that individual or organization. If you find that changing an employee to a vendor will involve losing certain data associated with the person or company it represents, you can store this information using Notes. Each vendor listed in QuickBooks has a notepad to which you can add, append and edit notes.