• You definitely want to record multi-track. I have an 1818VSL that can record eight channels to a laptop, and I'm happy to loan it.

• With acoustic folk music, you generally don't need to record with people sound-isolated from each other or build things up with multi-tracking. You'll get bleed between tracks, but as long as each track mostly just has one instrument you'll still have the freedom you need to fix things later.

• The quieter a place you can record the better. Editing around car horns is no fun. Also think about low level noise in the place you're recording: is there a heating system? Noisy lights? Other stuff?

• The quieter your environment is, and the better the acoustics are, the more you can pull your mics back from your instruments and pick up a fuller more realistic sound. On the other hand, the noisier it is or the worse the room sounds the more you want to close-mic and pick up just the instrument as it sounds at that point.

• Sound quality matters a lot more than at a dance. It's usually worth using mics on stands for everyone and skipping the pickups, because the tradeoffs are different. Full size mics generally sound much better, you're not worrying about feedback, and the convenience to move around doesn't apply if you're staying still to record anyway.

• You can't record with monitors. If you have instruments that aren't loud enough for each other to hear unamplified then you need to set up headphones. Headphones are annoying, take some practice to get used to, and are worth avoiding if you can.

• You can't talk to each other while recording. I hate this, because I'm really used to talking to coordinate with bandmates. You may need to practice playing well together without talking, I don't know.

• Don't jump right into recording everything. Record some practice takes and listen back to them. Listen to each individual instrument solo'd. Does it sound like itself? It's ok if it's picking up some of your other instruments but you definitely need to mostly be hearing the one instrument or you won't be able to balance later. You might need to do something like physically move a loud instrument farther from everyone else.

• Now do more practice takes trying to get a rough mix ready, just balancing levels. This will let you listen back to takes and figure out if you're happy enough with them.

• Tune really often!

• When you're ready to record, run several takes of each set, as similar to each other as possible (don't change keys, instruments, volume levels, or tempos). Generally one take will be the best one, but then you're going to want to have the others available for cutting and pasting (on a per track basis) to fix mistakes.

• Having someone in a producer role is really valuable. This is ideally someone you trust a lot, both to handle logistical things (are we using the time available well, should we move onto the next set now, are people seeming tired and hungry and we should break) and musical things (let's try another take, this isn't coming together and you need to change it, your tempo isn't consistent). When this works well it lets you offload a bunch of mental effort to someone else so you can focus on playing good music.

• Recording can be really stressful. Listening back to your best work and realizing it's not as good as you hoped is really rough. Try extra hard to be nice to each other and be kind in giving feedback.

My posts about recording our live CD and preparing for our studio CD might be helpful. I also wrote posts about the economics of each (live CD, studio CD).