The two main ideas in creating a work space are functionality and cost. Your home office work area should allow you to perform all necessary duties of your business without unduly disrupting the functioning of the rest of your household, and should do so at a cost that does not put your new business too deeply in the hole.
Most people working out of their homes find it helpful to have the work area somewhat isolated from the "personal" areas of the home. Whether you will find this true for you depends on what type of product or service your business provides, how you work best, and why you're working out of the home in the first place.
What kind of product or service? The type of product or service that your business provides often largely determines where your work space will be situated in your residence. If clients and customers will be coming into the work area, it's usually best to have it as isolated as possible from the rest of the house. Doing so helps establish that you "mean business." Also, to the extent possible, your work area should be situated where customers and clients will have to walk through as little of your personal space as possible. If feasible, a separate entrance (or even a detached building on your property) to the work area might be best.
If your business involves working with power tools, other noisy equipment, or paint or other smelly solvents, it's probably the garage for you! But you still may want a desk or other work area where you can do your business's paperwork.
Why do you have a home business? Considering the type of business that you operate, all signals may point to selecting a work area in your house that is as isolated as possible from the functioning of the rest of the home. But before you set up your office in your attic or crawl space, remember why you chose to work out of your home. If you did so to care for your children or elderly parents, such isolation might not work out.
Watch the cost! Possibly you have decided where to put your work area and are thinking that physical changes should be made to enhance its efficiency (partition walls, wood paneling, sound proofing, carpeting, etc.). All of these may be good ideas — and possibly some or all of these changes should be done — but the question is, when? If you are just starting your home business, economy and efficiency should be your watchwords. Expenses of doing business often are larger than anticipated, and income may not flow in as quickly as planned. Because of this, it's a good idea to hold your initial spending on physical facility items to those that are absolutely necessary to kick off and perform your business. You can always upgrade your work area when the profits roll in. You might even include your desire for a better work area as a business goal: "When my weekly sales reach $XXX, then I'll carpet the office."
If you are able to qualify, Uncle Sam may partially subsidize your home
business in the form of income