Whether you're a full-time telecommuter or just need a place to pay bills, a functional home office can always come in handy.

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If you're setting up a home office from scratch, experts suggest you should set aside about $5,000 for a computer, software, a four-in-one system (printer, copier, scanner and fax), high-speed Internet service, separate phone line, paper shredder, desk, ergonomic chair, file cabinets and good lighting. Don't forget to stock up on the smaller items, such as paper, pens, ink cartridges and folders.

"Pay attention to the crucial items and do not go overboard with the frivolous. A secondhand or donated desk can hold a brand new computer, but the entrepreneur could do serious damage to his back by spending every day in a wobbly chair," said Catherine Meyers, senior management consultant at the University of Pittsburgh Small Business Development Center.

Meyers said that the key to setting up a good home office is to design it around your career.

"Think about the product or service the business is offering to determine what furniture or equipment is crucial to delivery and what is merely a luxury," Meyers said.

Entrepreneur Paul Lawrence Vann agreed, advising to keep the end goal in mind when selecting what to buy.

"For example, if you're going to be coaching clients, ensure you have a comfortable desk, chair, laptop computer, and the best technology available so you can conduct sessions using a web cam," said Vann, the founder and CEO of Laurel Wreath Communications Inc., a professional speaking, training and publishing company.

If cost is a concern, professional organizer Barry Izsak said to make a good computer the priority, and buy furniture secondhand.

"The computer is the most important. Then, the desk and computer work station, and at least one two-drawer filing cabinet. Used office furniture stores and resale shops are great places to start looking if you're on a limited budget," said Izsak, president of the National Association of Professional Organizers.

Meyers agreed, adding that the luxuries should be set aside in favor of growing the business.

"Never spend so much money on an office that you are left without a budget for marketing. A great-looking office will not sell any product or service," Meyers said. "Don't lay new carpeting in the guest bedroom-turned-home office if you are then unable to join the local Chamber of Commerce or local professional organization. Money spent on graphics for well-designed business cards will generate more business than a fancy fax machine. Always spend money on the things that will generate business."

Meyers said another factor to consider when budgeting is how valuable your time is.

"For instance, rather than spending money for QuickBooks or Peachtree (accounting software) and taking time to learn the program to use it correctly, the entrepreneur may be better off hiring a bookkeeping service," Meyers said.

Experts said not to skimp on the phone setup, because a separate line from the house number can be critical to a home business.

"There is nothing more important. It's unprofessional to have children answering the phone or to not answer every call with your business greeting," human resource and management expert Lynda Ford said. "If you don't have three phone lines coming into your house, have an additional one installed. The cost is minimal. Nothing screams amateur like a single phone/fax line."

"(A separate phone line) gives professionalism and credibility to the business. A child answering the family phone or a family member tying up the line for hours using the Internet can deliver a death blow to even the most well-organized, professional home office," Meyers said.

Meyers said more entrepreneurs are using cell phones as a business line, but the disadvantage is in not having a listing in the phone book.

So you have the furniture and equipment in mind, but where do you set up the home office?

"As far away from the noise and commotion as possible, preferably a room with doors that close. Ideal places: an entry dining room with French doors, an extra bedroom or den," Izsak said.

Another possibility is the basement, if you have one. Izsak said if you have limited space in the home, as a last resort you could use a decorative divider or bookshelf to create a small office area.

The bottom line is that you may need to get creative with space.

"I once saw a home office that was run efficiently and conveniently from a closet with louvered doors. It worked perfectly for that particular business," Meyers said.

Wherever you choose to set up the office, experts said you'll need to set some guidelines.

"Make sure your home office is as comfortable as possible, and treat it as though you're working in an office building. If you have a spouse or children, ensure you establish boundaries in order to achieve home office-life balance," Vann said.