A Keogh works like the typical corporate-defined benefit or profit-sharing plans, but is specifically for non-incorporated businesses. Basically, you can sock away up to 25% of your after-tax earnings for up to $30,000 a year.
There are, however, a few drawbacks. First, if you have employees, the percentage you elect for yourself has to be used for all other employees who qualify. Second, as the employer, you make all the contributions and you make all the investment decisions. The good news is that just as with corporate plans, deferred vesting is allowed so that you can require employees to work for up to three years before they are covered. Perhaps even better news is that if you are participating in another retirement plan, you can still set up a Keogh.