What are the main differences between employees and independent contractors?

To see the differences in detail, you should look at the Department of Labor and IRS websites--both have extensive rules on the subject, looking  at it from slightly different perspectives  (e.g. labor law vs. tax regulations).

In brief, an independent contractor is, at least to some degree, "independent." Typically, he or she--

1) Controls how he or she does the job--the employer hires the contractor to do something, but does not micromanage or direct the person in so doing.

2) Has at least some control over location of work and hours of work--this must be balanced by the practical needs of the task, but as a general matter, the contractor does not need to be at the office "9 to 5" unless he or she is actually doing a project at the office for those hours.

3) Is responsible for his or her own training and equipment--which includes having the economic responsibility for providing it.

4) Is responsible for marketing his or her own services and obtaining new clients or work.

5) Unlike an employee, who always "makes money" by working (i.e. always gets paid a wage or salary; doesn't typically pay costs or expenses, except if they will be reimbursed by the company), a contractor could show a loss on a job or project, if he or she has to spend more on parts, materials, travel, etc. than he or she is billing. In that way, a contractor is like a businesses, which could show a profit or a loss.