Is there a way to change a customer to a vendor? Also, when I pull up my contractors, my vendors are there as well. Why is that?

How do I change a customer into a vendor in QuickBooks Online, and why do my vendors show up under contractors?

There's no button that converts a customer into a vendor in QuickBooks Online, but there is an official procedure: create the name on the vendor list, move the transactions over, and retire the old customer profile. And your vendors show up when you look at contractors because a contractor is a vendor you've flagged to track for 1099 payments, so both draw from the same list.

Move the name to the vendor list

The documented steps handle the name, the transactions, and the old profile in one pass.

1. Go to All apps, then Expenses & Bills, then Vendors, and select New Vendor.
2. Enter the vendor's information, making the display name at least one keystroke different from the original customer name (a middle initial works), then select Save.
3. Run a Transaction List by Customer report to see the accounts, dates, and amounts tied to the former customer.
4. Edit each linked transaction and save it to the new vendor name.
5. Retire the original customer: go to All apps, then Customer Hub, then Customers & leads, find the name, and make it inactive (QuickBooks hides the record rather than erasing it). You can then edit the vendor's display name back if you'd like.

Guide: Move names between Customer, Vendor, and Employee lists in QuickBooks Online.

If the same name needs to be both a customer and a vendor

QuickBooks won't allow the exact same display name across customers, vendors, and employees, so keep a small distinction on one of them, like a suffix or middle initial. If you hit the "name supplied already exists" message and aren't sure where the duplicate lives, select + New, then Check, and type the name in the Payee dropdown; the list shows whether it's a vendor, employee, or customer. From there, either change the name or make the unused profile inactive: Fix "The Name Supplied Already Exists" error message in QuickBooks.

Why vendors appear under contractors

Adding a contractor enters them as a vendor, and the 1099 tracking lives on the vendor profile (the Track payments for 1099 checkbox), so the contractor view is drawing from your vendor list. That's expected behavior, not a problem with your setup: Set up contractors and track them for 1099s in QuickBooks.

A quick note on merging

Merging is a cleanup tool for true duplicates on the same list (say, two vendor profiles for one company): it moves the past transactions onto the profile you keep and retires the duplicate. It isn't a way to move a name between lists: Merge duplicate vendors in QuickBooks Online.