Using the money to "pay vendors and employees" does not hide the source of the money. Laundering typically involves inflating reported income so that you can slip the dirty money into your income stream. If you run a pizza business, you sell one pizza for $10, but in your receipts you claim you sold two pizzas for $20. Now you've laundered $10; it's hard for the government to prove that you didn't sell two pizzas that day, and the income will seem legit.