Buy a good computer with several gigabytes of RAM, a big hard-disk drive and a high-powered sound card. Special multimedia computers are specifically designed to handle music, audio and video files, recording and CD/DVD production. Whether you prefer a Mac or PC, there are plenty of software and hardware options available.
Make sure your sound card or external recording interface has inputs for instruments, microphones and headphones. You'll need either a FireWire interface or ports for MIDI devices and high-speed USB connections. Many newer MIDI keyboards or other devices use USB ports. Make sure you use the USB 2.0 interface or better. Older MIDI devices may not be USB-compatible, so you'll need a MIDI port.
Music mixing and mastering software like Logic and GarageBand are the most popular versions for the Macintosh. For PCs, Cubase, Pro Tools, Reason or Digital Performer are professional packages that work very well. You can do nice work with free or low-cost downloadable software like Audacity, Voyetra Audio and Magix Music Studio. Some of the low-cost packages require add-ons for certain tasks like converting files to MP3 or AIFF standard CD files.
The quality of your recording equipment improves your digital recordings more than anything else. You can produce excellent-quality digital recordings with a basic desk or laptop computer if the signal input to the computer is good. Spend money on condenser microphones for singing and acoustic instruments. MIDI instruments or electric guitars plug straight into a simple mixing board and provide an excellent signal.
The mixing board allows you to set the levels and quality of signals received from each microphone, MIDI device or electronic instrument and plugs directly into the computer. Spend some money on a good set of headphones so you can monitor the recording process and adjust the sound to achieve that perfect blend.
Before you record, play around with the software and instruments to learn how they work together. Learn to lay down and blend separate tracks, set input levels, and record multiple instruments, percussion loops, sounds and effects. It's critical that you learn to use the tools well before you get serious about recording.
Don't be discouraged if things don't sound great when you start out. You'll learn how to improve the sound. You can make inexperienced musicians sound better than they are by using software special effects. Like anything worth doing well, it will take time, practice and hard work, but you will be able to produce recordings that you can burn onto CDs or turn into MP3s or movie soundtracks right on your desktop.