This is exactly what I did this year. You are allowed to have one employee, which in my case is my wife who is my book keeper. The added benefit is that you can then put away an additional $22,500 into her 401K. So I paid her $17,500, then matched an additional $5,000. This total $74,500 in tax deferred 401K contributions for our family. The best thing about this is that I salary myself at $120,000 thus keeping my payroll taxes low as well. With a sep ira you have to salary yourself at circa $250,000 to get to the $53,000 mark and have to pay more payroll taxes and have your salary in a higher tax bracket as well. Solo 401K is hands down the way to go if you are self employed with only one employee max.