How do I setup contacts and accounts for business partners ?

How do I setup contacts and accounts for business partners ?

 From what I understand Accounts are for Customers or Prospects.

I have lots of business partners so I'm not sure what field I should use to record their company? Should I use the account filed, but then a account would be setup for them. (Maybe vendor filed under contacts or setup a custom field?)

Is there a best practice for this type of thing?

Thanks,

Dave