At the SBDC we are often asked about the difference between an employee and a contractor. Contract employees have their own tools, can work for multiple companies, set their own hours, are not entitled to company benefits and they pay their own taxes to the IRS. Employees on the other hand are provided training for the work to be done, work for one employer, is on the company's payroll and are typically offered company benefits.
At first glance it would appear that a contract employee is the better deal. However, Intuit has created a wonderful info-graphic which states the benefits and concerns associated with both types of workers.