Contacts limit in basic vs standard - what counts? Are customers contacts?

Contacts limit in basic vs standard - what counts? Are customers contacts?

I’ve been using books for a number years for my small business. I only ever work with 20 clients at any given time. I do purchase services from a number of vendors to run my business, so there are some comtacts there too.  I used to use the basic package, but then upgraded to standard because I had too many contacts and I was gettimg warning messages.

Can someone explain the difference between customers and contacts? And do inactive customers count toward the limit? I’m confused. 

I don’t have a big business and would like to just use the basic package, but not sure if that’s possible given the above.

Thanks,
Peter