Sketch out your logo design on paper before starting work in Photoshop. Decide what features (shapes, images, or colors) you want your logo to have, as well as whether you want just a graphics logo, a text logo, or a combination of both.
Open Photoshop. Select "File" and click "New." In the dialog box that appears, set the size and resolution settings for your logo design. These settings depend on how you will use the logo. If it is for the web, it needs only a resolution of 72 pixels. But if it will be printed, you should choose 300 pixels. Keep in mind that if you later want to use this logo for a larger purpose, like a billboard, it may turn out fuzzy. For this reason, you might want to plan ahead and make the size settings quite large.
Create a new layer by clicking on the "New Layer" icon at the bottom of the "Layers" panel. Select the "Pen" tool from the toolbar and use it to draw out a path for the basic outline of your logo design (referencing the sketches you drew in step 1). To close a section of the path, click on the first point you created or hit "Enter." Go to the "Paths" tab, right-click on the path you see listed there and select "Stroke Path" from the options to draw a line along the path. Create all the lines in your logo this way. Use separate layers for different portions of your design. This allows you to apply different effects to each part.
Use the "Paintbucket" tool to fill sections of your logo with color. Then go to the "Layers" panel and click on the "FX" icon. Select special effects such as "Bevel and Emboss" or "Drop Shadow." For each effect that you choose, adjust the settings to your liking and then click "OK."
Select the "Text" tool, choose the size, font style and color in the options at the top and use it to enter the text (if any) that you want for your logo design. When you have finished your logo, save it as a PNG file to preserve any transparency.