We have all been told the importance of contributing to a 401(k) as a retirement plan. 401(k)s are great because your employer sends your contribution straight to the company managing the investment plan, tax-free. Some employers will even make matching deductions to your retirement plan.

But what happens when you are your own boss? Can you still have a 401(k)?

401(k) for One

Lucky for you, you're both self-employed and you can have the benefit of a retirement plan. The individual 401(k) — or solo 401(k) — was designed for sole proprietors whose companies have no employees.

The individual 401(k) functions pretty much the same as a traditional 401(k), and you can even get it in the Roth version. And due to the fact that you can contribute as both employer and employee, the solo 401(k) is ideal for setting aside large sums of your income for retirement. (Your spouse can even get in on the act if he or she earns any income from the business.)

And if you want an even higher ceiling on contributions, you can go with a Simplified Employee Pension (SEP) IRA. The SEP IRA allows for contributions of up to 25 percent of your income or $49,000, whichever is less.

Solo Setup

Of course, one of the incentives of a 401(k) is that your employer does (almost) all the work: they select the plan administrator and they send your payroll deduction straight to your account. (You just need to choose the investment option provided by your plan.)

But in this case, you're the employer, so it's up to you to either set up and administer the plan yourself or find a reliable plan provider. Be aware that your options could be more limited than corporate 401(k)s. Also, pay specific attention to the 401(k) plan fees for employers, since you'll be paying those yourself.

With all the administrator options, contribution considerations, and tax implications, you may want to talk to an experienced employment attorney about the best way to structure your individual 401(k).