The best retirement plan for most solo-entrepreneurs is the Solo 401(k). 

No, not a SEP-IRA or Simple or Keogh … but a 401(k) just like the old 401(k) you had at your last corporation job … with a few GREAT differences. 

A Solo 401(k) (also called an independent 401(k) or self-employed 401(k)) is a retirement plan that falls under the same tax laws as your corporate 401(k) from your last job.  You get to set aside $15,500 (2007 tax year) of your income (whether that is a salary or self-employed business profits) … but as a self-employed person, you also get to set aside additional money — 20% of your self-employment income up to a total of $45,000 (2007 tax year).

Why is a 401(k) better than a SEP-IRA?

• You can set aside 100% of your income up to $15,500.  So, if you have a brand new business that barely squeeks out a profit, you can set aside that entire profit and not pay taxes. 
• You can hire your spouse (who probably is doing work for you anyway), pay your spouse $15,500 and put that entire amount of money into his/her 401(k).   **if your spouse already has a 401(k) from another job, be aware of annual limits.**

Otherwise, it works just like a SEP-IRA.

• You can contribute 20% of self-employment income up to $45,000 (2007). 
• You can open an account at a major discount brokerage like Charles Schwab or Fidelity.
• Expenses to administer are low or non-existent, especially once you have a bunch of money in your account.
• If your money is at a discount brokerage, you can pick whatever mutual funds, stocks, bonds, or CDs you want. 
• Saving for retirement is the easiest way to save on taxes.
• You can make your contributions up until April 15th of next year — so you don't have to decide now.

Take Action

What retirement plan do you have right now?  If none, start paperwork on a solo 401(k) at Schwab, so you can make contributions later if appropriate.  If you have one, compare the feature & expenses with a 401(k), or discuss with your financial advisor.