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I'm creating a site that will have people that work for my company using it( on the domain) and contractors who are not currently on the domain. I'm trying to figure out how to give access to the people who are not on our domain to the Sharepoint site.

Can someone point me in the right direction?

+3  A: 

Hi Gambler

You need to set up a zone with Forms Based Authentication for the people not on the domain. Look at this series on MSDN for guidance: Forms Authentication in SharePoint Products and Technologies

Per Jakobsen
One thing to add, from a Sharepoint licensing prospective this option is the same as adding your external users to AD. But, with this option you save on AD licensing costs.
unclepaul84
http://www.sharepointproconnections.com/TabId/149/NodeId/1924/License-to-Fill--Licensing-Windows-SharePoint-Services-for-the-Extranet-.aspx
Ryan