An individual or company that sells goods or services to another business or customer; often used in business-to-business (B2B) transactions and vendor agreements.
What is a Vendor?
A Vendor is a person or business entity that provides goods or services to another party—typically as part of a commercial relationship. Vendors can supply anything from physical products and raw materials to digital services, software, or consulting. In a business context, especially in accounting and procurement, the term “vendor” usually refers to external suppliers a company pays for products, tools, or services that support its operations.
For example, a U.S. e-commerce company may have vendors for packaging materials, marketing services, or software subscriptions. Vendors may be domestic or international, and depending on the volume of business, relationships are often governed by vendor contracts or service agreements that specify pricing, delivery terms, quality standards, and payment schedules.
For non-U.S. founders operating U.S. businesses, vendors play a critical role in day-to-day operations. They may include U.S.-based logistics providers, developers, accountants, or manufacturers. It’s important to properly record vendor payments for bookkeeping, tax compliance, and cash flow tracking. In accounting systems, vendors are often associated with accounts payable—the money owed to suppliers for unpaid invoices.
Additionally, if your business hires independent contractors or freelancers, these individuals may also be considered vendors for reporting purposes. In the U.S., payments to certain vendors—especially unincorporated individuals or businesses—may require Form 1099-NEC or Form W-9 filings for IRS compliance.
In summary, a vendor is anyone your business purchases goods or services from. Managing vendor relationships and tracking payments accurately is essential for financial reporting, compliance, and maintaining good business operations.
