If at all possible, designate an area to be used exclusively for your music production. It doesn't have to be a grand space; a study or spare bedroom will suffice, but it needs to be free of clutter that can distract you from the task at hand. When your recording space functions exclusively as a home studio, you'll find it easier to focus on being creative.
Your computer will be the heart of your digital audio workstation (DAW), and ideally, it should be used exclusively for recording music. Recording and editing music files takes a lot of processing power, and having other applications in use at the same time can hamper the performance of the computer, resulting in compromised audio quality. It's especially advisable to use a different computer for all your web browsing activities in order to reduce the threat of viruses and spyware, which could severely inhibit the performance of your recording software.
As far as processing power is concerned, 1GB of random access memory (RAM) is the minimum, with 2GB being advisable, especially if you're going to be recording many tracks and using effects plug-ins that require more processing speed. Make sure, too, that your operating system is an up-to-date one. If not, you may find that newer recording software won't function correctly.
There a several high-quality options when it comes to choosing a recording software program to record and edit your music. A lot will depend on whether your computer is a Mac or a PC, since some applications (Sonar, Sound Forge and Adobe Audition, for example) are only compatible with PCs, while others like Logic Pro, Garageband and Digital Performer will only function on a Mac. Fortunately, the industry standard Pro Tools LE application is compatible with both systems, so you have plenty of options to choose from. If you're a total beginner, and are wary of paying for features that you don't need, it may be worth investigating a basic package like Apple's Garageband or Cakewalk's Music Creator. These will offer you a great introduction to digital computer recording for a very low investment.
Before the recording software can do its work of capturing and playing back your audio signals, you have to have a way to deliver them to the computer. To do this, you'll need a piece of hardware known as a digital interface. The interface will have in-built pre-amps; pre-amps amplify low output signals, like those from electric guitars and condenser vocal microphones, so that they're strong enough to be heard and recorded. This interface will be connected to your computer via USB or FireWire, and you'll plug your microphone or instrument cable directly into the interface. If you're a solo artist, you can get away with a basic two-input model such as a M-Audio FireWire Solo. This device has both a guitar input and an XLR microphone input and can be had for around $200. Of course, if you're recording a full band, you'll need more inputs. Expect to pay around $600 for a unit like the PreSonus FireStudio FireWire recording interface, which offers eight microphone pre-amps, and should be adequate for most recording situations.
With some high-end condenser microphones fetching thousands of dollars, equipping a studio with a selection of quality microphones tailored for different studio tasks can be very expensive. Fortunately for the home recordist, there are cheaper options. Condenser microphones such as the Audio Technica AT3035 and the acclaimed Rode NT1A, which can be picked up for around $200, can deliver quality results when used to record a wide variety of sound sources, including lead and background vocals, acoustic guitars and pianos. They can also be useful when used in pairs as overheads on a drum kit.
Condensers are high-performance microphones with a great frequency response that can capture great detail, but they can be quite fragile. Capturing more explosive sounds with high sound pressure levels (SPLs), such as drums, require the use of a dynamic microphone. A good dynamic microphone like the legendary Shure SM57 is a worthwhile (and inexpensive) addition to any home-based production studio. It's versatile and sturdy, and is as adept at capturing the crack of a snare drum as it is at recording an electric guitar amplifier. With one such dynamic microphone and one condenser in your arsenal, you can have most recording chores covered for very little money.
Audio files can be large, and storing them on your computer will quickly fill up its hard drive. For the sake of keeping your computer streamlined, you should invest in an external hard drive and record your music directly to it. In addition to keeping your computer free of files that could slow its performance, your valuable audio files will be safe and sound if your computer crashes.