What Are Vendors in Quickbooks?

With so many options for QuickBooks accounting software customization, it can be confusing to tell the difference between business associates, customers and vendors. QuickBooks defines a vendor as someone from whom you purchase a product or service. It's up to you to further define and categorize vendors into types based on the needs of your business.

Use the QuickBooks Vendor List function to retain information about the companies and individuals you conduct business with. Add a new vendor to the list by clicking the "Vendor Center" icon. Select the "New Vendor" option in the upper left corner and enter the name, contact information and opening balance, if any, in the spaces provided in the resulting entry fields. If desired, click the "Account Prefill" tab and enter default payment terms and accounts. Select "Next" to save the vendor and enter another, or select "Save" to save the vendor and close.

Defining vendor types allows you to assign categories that make sense for your business needs. Types can be industry-specific or based on geographic location. They can also be subsets of other vendor types, such as designers -- interior and landscape. The use of vendor types can be time-saving and allow for more efficient organization. You can pull reports and create mailings for vendors according to type, cutting down on resources and supplies. Vendor types are assigned using the New Vendor or Edit Vendor function. To display your Vendor Types list, click the "Lists" menu, followed by the "Customer & Vendor Profile Lists" option and the "Vendor Type List" option. Use the options at the bottom of the list to "Add," "Edit" or "Delete" vendors.

When a person or company is initially entered into QuickBooks as a customer and later functions as a vendor, or vice versa, it is necessary to list that person or company on the Vendor and Customer lists. This will allow for accurate reporting, invoicing and other accounting functions. To avoid unintentionally mixing up transactions, the name should be differentiated or tagged. This can be done simply using a middle initial on one list, or tagging the customer account with a know numeral or letter, such as "c" for the customer list or "v" for the vendor list. Use the edit function to ensure that the name is accurately displayed in the Bill To portion of the customer information field, and the Print On Checks As portion of the vendor information field.

A 1099 vendor is issued a 1099-MISC form at the end of the tax year, and is often also referred to as an independent contractor. Unlike an employee, who receives a W-2 form at the end of the tax year, and for whom you withhold taxes with each pay period, a 1099 vendor is payed regularly with checks, but is responsible for the filing and payment of their own taxes. To add a 1099 vendor, click the "Vendor Center" icon and select the "New Vendor" option in the upper left corner and enter the name, contact information and opening balance, if any, in the spaces provided in the resulting entry fields. Select the "Additional Info" tab and enter the vendor's tax ID number, which they must have furnished. Or, if the vendor is a sole proprietor, enter the Social Security number. Check off the "Vendor Eligible For 1099" option and click "OK" to save.