Each Wednesday we answer your questions!

Answer: A vendor is an individual or business that you send money to (a withdraw of cash).  This could be anything from office supplies, rent, contract labor, professional development, advertising and so much more. 

A customer is an individual or business that sends you money (an increase of cash).  This could be in the form of income or a refund (a refund is a vendor returning money to you). 

These can become confusing in QBO. In QuickBooks, money going out is referred to as an expense, a vendor, or a payee and can be in form of a bill, expense, or check.  If you are sending money out, use the expense tab on the left toolbar.  

Money coming in is referred to as a customer or client and can be in the form of an invoice, a sales receipt, or a deposit.  To create an invoice or record incoming money use the sales or invoicing tab on the toolbar (different versions of QBO use a different term). 

It is possible to have the same individual or business as both a vendor and a customer.  However, QBO does not allow for the exact same name to be used more than once.  If this happens, you can create a unique name for the new type.  Some users like to add a C to the end of a customer name or a V to the end of a Vendor name. And this method can help in making sure the proper account is selected in a transaction.

On a side note; employees should only be set up in QBO as an ‘employee type’ if you use the payroll module in QBO.  If you do not have the payroll system turned on in QBO, then employees need to be set-up using the vendor type. This is important as it affects, tracking, reporting, and being able to find transactions in QBO.