• Assess your needs. Determine whether you need storage space, a phone line or ways to accommodate clients or deliveries.

If you have children at home, there are other considerations.

"With small children, you may want to keep things off the floor, or keep things locked up," said Nelda Moore, an adviser to the Greater Louisville Home-Based Business Association. "If you have teens who use computers, you may need a private computer."

Mindy Burke has made it clear to her daughter Danielle, 6, that she is not to invade her mother's office space. Burke's home office has separate phone and fax lines, a computer and a walk-out door for easy customer access.

"The office part is off-limits, and she knows it. It's not a play area," said Burke, who runs an embroidery business out of the basement of her Valley Station, Ky., home.

• Location. The next step is to choose a location, be it a corner of the basement, a bedroom, the dining-room table or the garage.

"You want space," said Donna Ridings, owner of PC Executives and president of the Greater Louisville Home-Based Business Association. "You don't want it in a walk-in closet, or the corner of the basement that's difficult to get to."

A proper location, said Dallas home-office expert Lisa Kanarek, can make it easier to work. "If mixed with other things, it will be hard to stay focused. It's hard to get into it mentally if you have dirty dishes next to you."

Burke spent a couple of thousand dollars to remodel her basement when she moved in about two years ago. She knocked holes in some walls to create more room, put in tile flooring and "spruced it up a bit." She also installed shelving and converted a closet into storage space.

"I try to keep things organized," she said. "That's the hardest part."

• Insurance. A homeowner's policy probably won't cover the contents of a business office and any related liability, so your coverage would need adjustment, said William Stiglitz, an account executive with HBH Insurance Group in Louisville. On the other hand, if you work outside the home and use a home office incidentally, losses probably would be covered.
  
  
• Regulations. Before you hang your shingle, check local laws, including specific neighborhood regulations. Communities may regulate the number of employees and customers on the premises, parking, changes to the building's appearance, deliveries, hours of operation and kinds of occupations permitted.

Local homeowners associations and small cities may have their own rules.

• Home value. A study sponsored by the National Association of Realtors suggested that selling prices are reduced by 5 percent on homes that advertise a "professional home office."

But simply setting aside space for an office shouldn't hurt a home's resale value, said Bill Wilson of Knoxville, Tenn., chairman of the American Society of Appraisers' Real Property Committee.

"I look at that almost as a furniture item," he said. "Typically you don't do anything structurally, so it has no effect."

It could even boost a home's value, he said, if a buyer is looking for a home office.