Instruments
The discussion so far has emphasized equipment, but you can't forget about the instruments you're going to play. They're pretty important to this process because, no matter how good your recording gear is, your instruments need to sound good. It stands to reason that any problems you have with your instruments are going to get worse when you record them. There's a widely used phrase in the recording world: Garbage In, Garbage Out. Make sure you have decent-sounding equipment. It's a myth that “you can fix it in the mix.”
Experiment
Adding new sounds to your music is one of the fun parts about home recording. Even if you only play guitar, adding several different-sounding guitars on different tracks can widen the scope of your music. Experimentation is the name of the game here; you'd be amazed at what sounds good together. Keyboard players can really go to town with different sounds, layers of instruments, and even drum kits from the keyboard.
Drum machines have always been useful to nondrummers and home studio musicians alike. Acoustic drums can be difficult to record well and can be too loud for many apartments and houses. Sample-based drum programs such as Battery from Native Instruments and EZdrummer from Toontrack sound so realistic it's uncanny. Their quality is so high because samples are actual recordings of drums, not synthetic versions. That's right, someone recorded each drum one by one at different volume levels and the sampler plays them back for you!
Another option if you're not going to play individual drums, is premade drum loops. These loops are professionally recorded in studios and are every bit as real as having the drummer with you. They're well mixed, and they sound very cool, so they're definitely worth checking into. To utilize loops, you use a computer and recording software. Loops come as pre-mixed audio files; you simply add them into your recording program on an empty track and voilà, instant drums!
All recording software works with loops. From Apple's highly intuitive GarageBand to the über-powerful Pro Tools 8 software from Digidesign, loops are a common way for musicians to work.
Collaborate
Just because you can lay down eight or more tracks of yourself playing each instrument one pass at a time doesn't mean that you should. Why use a sampled drum when a real drummer is close by? By getting to know other musicians and home studio owners, you can collaborate with each other and utilize the combined power of all your talents. Maybe you'll even make a record together. Who knows what could happen. The possibilities are endless.

