If you are an independent contractor you will get an IRS form 1099 at the end of the year instead of a W-2. Independent contractors usually pay their own taxes, social security, and health care benefits. However, sometimes an employer will pay for certain benefits or fees, such as state fees or health care benefits, as an incentive to keep the independent contractor.
The classic example of an independent contractor is the computer consultant. This person contracts to do certain tasks for a particular company. Many times when a company is purchasing a new computer system, it will call in a consultant to set up the computer and load it with all the software needed.