Setting up your home office from scratch is a great feeling, because it means you have a blank canvas on which to create your perfect setup. It's important to get the right hardware, software and peripherals, but budget and space limitations are the first major considerations.

When it comes to computers, there is a huge range of choice. Business machines are now available for around £350, although the more you pay, the better functionality you get.

Mac v's PC

Whether you go for an Apple Mac or Windows-based computer is down to personal choice, with both offering their own look and feel-in terms of both the machine and the operating system. Files tend to be compatible between both types of machine, and the apps that run on the two machines do much the same thing, in much the same way, so which one you decide on, really comes down to personal choice – eg are you a Mac or a PC person - and finance.

Choosing a processor

The majority of the price of the computer tends to go on the processor, whether it's an Intel or AMD chip, the more expensive the model the faster the processing capabilities. The processing power of the computer is determined by two things, the clock speed; and number of processor cores. A faster clock speed and more processor cores (dual or quad), will enable the computer to carry out more calculations simultaneously, and therefore give you better performance.

The larger the screen the better

Another large part of the cost of the system is the screen, and like television flat screens, there are different types and technologies available and the trend is for larger and larger screens. Going for a large screen does give you real productivity benefits as a larger screen, enables you to have lots of windows open at the same time, for example, so you can see your emails, a web browser, and Word document at the same time. If you add a decent pair of speakers to the large screen, you can also use the computer as a home entertainment system.

If you are going to watch video and use the screen as a home entertainment system, then you need to ensure that the screen can cope with the fast screen refreshes needed from video. Most computer monitors are designed for text and still pictures and hence don't cope too well with moving images. Additionally a larger screen also requires a graphics system or graphics card capable of high resolutions. Make sure your desktop is capable of working with your display or you'll end up having to pay for an upgrade on day one.

Choosing your memory needs

A key element of the computer is the hard drive. If you're just using your system to store emails and Microsoft Office files then the size of the hard drive probably won't be an issue, and you should be fine with the one supplied. However if you're going to be creating and storing video, and editing and creating high-definition images and audio then you'll need something more substantial and fast. Consider a 250Gb drive as the absolute minimum, and look for a system that will allow you to add further drives should you need them

The amount of memory you choose for your system depends on the type of applications you will be working with. More (and faster types of) RAM memory enables the processor to operate faster and run more applications simultaneously. Two Gb of RAM should be enough for most business users, but if you're creating or editing video/audio/graphics or running databases or Computer Aided Design (CAD) type applications, then it's a case of the more memory the better.