Can someon please explain contractors to me? They are supposed to be entered under payroll but they are not employees, and then they show up under vendors. Help!

I understand that you may be confused about how to set up your contractors in QuickBooks Online (QBO). Allow me to provide some clarification, @knapiks. 

To manage payments to contractors and generate 1099 forms at the end of the year, you can set up contractors under the "Contractors" section within the Payroll feature in QBO. Even though contractors are not employees, they are included in QBO's payroll feature to streamline the process of managing payments and tax reporting for them. 

On the other hand, if you add a contractor under "Expenses/Contractors," they will be categorized as vendors. This categorization is mainly for organizational purposes. By categorizing contractors as vendors, you can track expenses related to them separately from other types of expenses. This can be useful for managing your overall expenses and understanding the specific costs associated with your contractors.

To sum up, contractors are managed in both the Payroll section for payment and tax reporting purposes, and in the Vendors section for expense tracking and categorization.

In case you need more information, I have attached some articles below as a reference:

• How to Add Independent Contractors and Track Them for 1099s in QuickBooks Online
• 1099 Setup

We got your back if you have other questions about managing your vendors and contractors. Have a great day!