Install the music production software of your choice. There are numerous options available to suit a variety of styles and budgets. Cubase, Logic and ProTools are popular fully-featured audio and MIDI workstations, but stripped-down versions are often included with the purchase of a PC audio interface. A number of free recording applications also are available, created by online communities or individual programmers.
Set up your output device, either Hi-Fi speakers or near-field monitors. Hi-Fi speakers are cheaper, but have inferior frequency response across the tonal range. They emphasize certain frequencies to make recordings sound full and textured, but when producing, an accurate representation is more useful than an optimized one. Monitors are designed to represent every frequency equally, from the lowest bass to the highest treble. This makes them better suited to producing music, as they alter the sound as little as possible. They should be mounted at approximately eye level -- as seen when seated at your production station.
Power off the PC, and connect your audio interface to the USB or FireWire port. Turn the PC back on and launch your recording software. Open the options menu and select the audio interface as the main input and output device from the drop-down boxes. Choose an interface that has at least XLR and 1/4-inch jack inputs. With these two connectors, you can connect the vast majority of microphones and instruments to your PC.
Check to make sure the gain controls are turned down to "zero" and connect your microphone. A good quality condenser microphone is a great addition to a studio, and is able to capture all the subtleties of a voice or instrument, but a cheaper dynamic version can perform the majority of recording tasks very well. Choose a microphone stand with a pivoting boom, as this will allow you to position your microphone low to the ground, for recording guitar amps and kick drums.