As with an employee, your relationship with a contractor is contractual, but this contract differs dramatically from an employment agreement. You must give the contractor reimbursement for the work, but there is no minimum wage required. Rather, the amount and type of reimbursement is decided between you and the contractor. If your company's stock option plan allows for stock to be granted to non-employees, you could offer stock options. You don't need to make withholdings for independent contractors and you're not expected to provide benefits.
Contractors often cover their insurance and expenses.
Unlike an employee, an independent contractor can be either an individual or a company. Because independent contractors typically work with many companies at once, you should make their hiring conditional on signing a proprietary information and inventions agreement. This contract protects your company's confidential information and intellectual property. You should include an indemnity provision that defines the independent contractor's relationship with the company. But there are other factors to consider.