You cannot delete any entity (esp if there are transactions linked), but you can make them inactive.  Make the vendor inactive then add the employee, using a slightly different name (e.g., vendor Joe Smith, employee Joe A. Smith).

Resolution for 'any entity issue: 'How do I remove a vendor, a subcontractor and change him to an employee' available: Yes.

The any entity issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the any entity issue yourself by looking for a resolution described in the article. If it is a complex any entity issue or you are unable to solve the issue, you may contact us by clicking here or by using other any entity support options.

For more information about resolving issues related to any entity in Quickbooks/QBO or to get support for the issue 'How do I remove a vendor, a subcontractor and change him to an employee', click the link below: