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for the sake of simplicity and organization."
I recommend having only Vendors as the choice for contractors. In the real world there is no difference between Home Depot and the local hometown hardware store (that is a sole proprietor) Just one of them is tracked for services (screen and window repair, equipment rental)
Here's a question, can you enter Bills for Contractors? The answer better be yes, and so now what really makes them any different than a vendor?