An ample home studio can be constructed in spaces as small as 12 x 12 - 20'. Within the confines of this space you can create countless professional-quality portraits.
Essential equipment begins with a quality camera capable of triggering remote flash units. You can use PocketWizard radio slaves or alternatively, a light-triggered Wein slave coupled to Vivitar DF 283 Series 1 Digital TTL and Vivitar 285HV flashes, triggered by an on-camera flash or by one remote, corded flash. If only one remote flash is being used, a simple 20-foot PC cord connected to your flash works fine.
One essential piece of studio equipment is a quality flash meter. A good one is the Sekonic L-358. A PocketWizard-enabled meter allows you to "walk the set" and establish accurate flash readings from the subject's position, so you can adjust power levels of the flash units up or down and/or move the lights closer or further from the subject to increase or decrease the desired flash output.
Beginners in home-studio portraiture should consider "hot shoe" mounted flashguns. Vivitar and Nikon flashes placed on Bogen light stands equipped with Bogen/Manfrotto 026 Swivel Umbrella Adapters are a good entry-level choice. To soften these lights you'll want to use compact foldable softboxes such as those made by Lumiquest. For groups of more than two, a small reflective umbrella from Photoflex works even better.
If you're handy, a simple backdrop support system can be made using basic building supplies, i.e. two-by-fours, PVC tubing, and assorted clamps easily found at your local hardware/home improvement center. For those who prefer the "plug-and-play" option, B&H sells a variety of permanent, semi-permanent and foldaway background support systems to fit almost any budget. A popular studio background support system consists of Bogen/Manfrotto Autopoles with a crossbar held in place by a pair of Bogen super clamps and U-hook crossbar holders.
Portable background support systems are available in a variety of sizes and configurations from Bogen/Manfrotto, Westcott, Impact, Botero, Lowel, Interfit and Savage. Many include bags for storage and travel.
As for backgrounds, start with 107-inch seamless 12-yard Savage paper in white, black and sky gray. These will handle most of your applications. The white paper is essential for high-key setups and black is indispensable for the "isolated" look. You can easily add color to the gray paper by using a Bogen FP213 Vivid Colors Filter Pack, which can be attached to your lights with clothespins or with gaffer's tape.
To add further interest to these otherwise featureless papers, try draping a sheet of white or colored gauze material (available at any local craft store) from an additional crossbar (or ceiling beam). The results look great lit from in front, or even from behind by bouncing a gelled flash off the seamless background (placed in a 2-foot gap between the material and the paper).
Consider getting at least one, if not several, painted muslin or canvas backgrounds (10 x 15' or 10 x 20') for portraits where you would like to have a more texture behind your subject.
It's important to light your backdrop evenly from both sides. Use diffused flashes or umbrellas placed at 45-degree angles from the center of the background aimed slightly past center to allow feathering of the lights and even light coverage. Avoid light spill onto your subject, with barn doors, or Cinefoil attached with gaffer's tape or clothespins.
To round out your portrait studio, an adjustable posing seat and table is essential. The seat encourages good posture and the table allows for a relaxed lean into the camera. Small columns, chairs, side tables and flower stands are also good adjuncts.
In order to take full advantage of large softboxes and umbrellas and still have the ability to shoot at wide or small apertures, you should consider a higher output studio flash. When photographing an individual subject, a small flash and wider aperture might suffice. Group shots, however, call for significantly greater depth-of-field—i.e. smaller apertures—in order to keep everyone in focus. Heaven forbid Uncle Charlie is "soft" while Aunt Martha is the only one whose wrinkles are front and center. By shooting with higher-output flashes, you have more options available to you in controlling depth of field as well as selective focus.
There are two main types of studio flashes: pack/head systems and monolights. A pack is a central power and control unit, which connects via cable to a flash head containing the flash tube and a modeling light. Most power packs accommodate 2 to 4 lights (heads) and are AC powered. Most manufacturers offer 2- and 3-head portrait flash kits.
Monolights are self-contained units that contain the power source, the controls, the flashtube and modeling light. Monolights generally weigh about 50% more than equivalent pack-powered heads. Whereas the pack/head setups should be purchased as a system, monolights are easily added one at a time. Monolights are also available in kit form for portrait photographers.
Two good monolights to use are the Speedotron Force 10 (1000W/s) monolight as a main source and a pair of Speedotron Force 5 (500W/s) for fill and backlighting the subject. The combined 2000W/s of power to be more than adequate for most any portrait scenario.
Here are some suggestions to do a simple setup for single subjects, by "eyeballing" the lighting. First, determine what f-stop you want to use. When adjusting the light setup, you may find it very helpful to utilize a bewigged mannequin head mounted on a light or mic stand. (Inanimate models complain much less than live models.)
Turn off all room lights to allow your flash's modeling light to illuminate the scene. Set up your first light at approximately 45° off to the side of your subject, slightly elevated and aimed downward toward your subject. Using your flash meter, take an incident reading from the subject's face, aiming toward the camera. Adjust the flash output control to deliver the desired aperture setting. If you cannot reach the desired f-stop electronically, then adjust the light stand's proximity to compensate, or feather the light by rotating the flash head toward or away from the subject. Observe where the modeling light casts a shadow from the nose and adjust visually by moving the light stand horizontally or vertically as desired. Recheck your exposure.
To fill areas that look too dark, use a white reflector to kick light into the shadow areas. Ideally, the shadow side of your subject should read 1 to 1-1/2 f-stops less than the lit side. Finally, set your camera white balance to "flash" or, better yet, manually pre-set the white balance using a neutral gray card.
Alternatively, fill can be achieved using a second studio flash powered down by 1 to 1 ½ stops lower than the main light. Once you reactivate your main (key) light and take another reading, you will note that the exposure has risen by 1 f-stop, because some of the fill light is spilling onto the highlight side of the face.
For a hair "kicker" light, "float" a Nikon SB-910 mounted with a hot-shoe adapter to a small Photoflex softbox, two to four feet above the subject's head via a boom and air-cushioned light stand. Set the exposure on this flash to meter ½ to 2 stops higher than the key light, depending upon hair color (darker hair needs more light to give it that "kicker effect").
Lastly, shoot a test exposure to see if any lights need tweaking. Paper and backdrop cloth material can be evenly lit from two sides, as above, or can be lit unevenly to create gradient effects. Consider using gobos, "cookies" (cucaloris cutouts) and colored gels as mentioned. Next, set each background flash exposure to read the same as your subject's total exposure, or 1 f-stop lower for each additional flash, which will add up to the correct exposure. Take this reading facing the camera from the background's position for each individual background flash and again for the total of all flashes. Test again and adjust accordingly.
Your first attempt at this setup should take about 60 to 90 minutes, but once you get used to it, you should be able to do it in 10 to 20 minutes. And remember to ditch the dummy head before your subjects arrive or they will think you're strange.
For additional lighting tips and points of view, there are many helpful books on lighting and posing for single and group photography available on the B&H website.