Level the shed. Check that the location is flat, or use blocks to raise it where necessary. If your floor is not level, you will have difficulties with gas and electrical appliances, running water and unnecessary stress on sections of the floor.
Install the plumbing, gas and electrical requirements to ensure you have lights, running water and a flushing toilet. If you are planning to shower and wash dishes and clothing, you will need an outlet for the waste water that carries it away from the shed.
Insulate the shed. Most sheds can become very hot in the summer and very cold in the winter. Lining the walls and ceiling with rigid polystyrene boards joined with spray foam insulation is cheap and simple to do, and you can cover it effectively with paint or attractive wall hangings.
Maximize the floor area of the shed through carefully planning each section. Install a loft bed if possible, or buy modular furniture that has a bed located above a sofa or desk. Alternatively, a futon or sleeper couch can do double-duty as both a bed and a sofa.
Use portable tray tables for meals. You can purchase a variety of styles at large furniture chain stores, and they can be set up wherever you sit and folded out of the way when not in use. A kitchen counter against the wall can serve as both a food preparation area and a dining space by placing bar stools in front of it.
Screen off a section of the shed for a bathroom area. If you have indoor plumbing and a shower, you will need a shower pan and toilet area. If not, hire or purchase a portable toilet for placement outdoors.
Bring color into the shed with bright rugs and cushions, wall hangings and fresh flowers. This will make the shed inviting, comfortable and feel like home.