Call it a garden shed or a backyard building–either way you build it, a small structure in your backyard offers you a wide range of options. Start with storage. Every homeowner has yard-care tools and equipment–mowers, edgers, chain saws. Get them out of the garage or basement and give them a space of their own. From an efficiency standpoint, having all your yard-care tools in one place–right in the backyard–will make yard care simpler.

GARDEN ESCAPE The traditional purpose of a backyard building was a gardening shed. For gardeners and “yardeners” alike, a garden shed is the perfect place to organize supplies, such as seeds, potting soil, hoses, rakes and hand tools, as well as equipment for keeping lawns neat and trimmed.

Outfitting a garden shed is easier than ever thanks to home organization tools–especially those designed for kitchen and closet use. For example, a stainless steel baker's rack offers rustproof shelving for storing garden chemicals such as fertilizers and pesticides–plus, it keeps potentially dangerous items high and away from kids and pets. Closet organizers, such as towel hooks, become hand tool holders. Broom holders can be employed as easy-access tool holders for long-handled rakes, spades or loppers.

The interior furnishings of the building dictates the structure's use. Add a potting bench inside, and the building becomes a potting station–an ideal spot to plant containers, divide perennials or start seeds. To increase its potential, install a bank of south-facing windows and a row of skylights, and your backyard building morphs into a greenhouse. It's a super workstation for starting seeds in the spring or storing tender plants in the fall and winter.

HOBBY AND CRAFTING SPACE A backyard building can offer more than space to stow your tools. And it doesn't have to be defined as “garden” space. For homeowners looking for a secluded spot to spend time on hobbies such as crafting or woodworking, a backyard building is the perfect place. To make your hobby space most efficient, install electricity and a water source. Air-conditioning and heating also are musts for year-round recreating.

OFF-SITE OFFICE Another use for a backyard building is a home office. Off-site and out of mind, a backyard office needs to be equipped with high-tech amenities such as ample lighting, phone lines and wireless access. If you have wireless internet in your home, it may work in your office, if not located too far away.

OVERFLOW GUEST QUARTERS A small building out back can be a way to add more living space to your household without adding on to your home. Throw down some toe-pleasing rugs, haul in a four-poster bed, and pile on the luxury linens, and you have bed-and-breakfast-like accommodations for guests.

PARTY HOUSE Kids instantly see the appeal of a tiny house out back–and may lay claim to part or all of it for a teahouse and/or fort. You can outfit a small building with kid-approved amenities such as colorful painted flooring (for easy cleanup and wipe-down). A great place for birthday parties and sleepovers, a backyard building can grow up once the kids have grown out of it. For adults, a backyard building can serve as an outdoor dining room. Deck it out with candlelit chandeliers and a great stereo system, and you can serve meals al fresco any time of the year. But why stop there? Add a mini kitchen, and your backyard building will be a home away from home–right in your own backyard.

THE NEXT STEP Garden shed, party room or workshop. Your local landscape designer can help you develop plans for your own building out back. Or, see what deals you can find online: