To set a vendor to inactive

Open the address book and choose vendors in order to have the vendor list pull in. Find the vendor you want and hit edit on the bottom. The vendor/Payee screen will come up, check the inactive button on the bottom to set the vendor to inactive. 

To set a vendor back to active after it was inactive

Go to Glossaries at the top, choose vendors and payees, the vendor glossary will open. Check the show inactive button at the bottom. Find the vendor you want to set to active and click the edit button at the bottom. Uncheck the inactive box and click Ok. Your vendor is now active again.