Hello - We have been paying the person whom we bought the business from through Checks, as she was set up in QB under "Other" Name type. As she is not a vendor, I don't want to change her Name Type, but she'd like to be paid via Direct Deposit.
I would not want her to receive a 1099 or a W4. Would it change any of the accounting if I input her as a Customer, but still used the correct accounts (business purchase and business purchase interest) for the actual amounts within the bill?
Yes, it may change some of your accounting since setting up this person as a customer would be an income (or accounts receivable) to your business when creating transactions under the customer created. Customers are people that pay you or your company for the goods/services you've provided.
In this case, it is highly recommended to get in touch with a professional accountant to set this up accurately and to account this accordingly.
I'd also suggest checking the articles provided by juVielL to learn more about paying vendors/contractions using direct deposit: