Setting up an indoor studio can be vastly different depending on the amount of space that you have in the room. One of the most important things to remember when setting up an indoor studio is that you want to have a large space available. If you only have a very small space, you will be very limited in the amount of setups that you can have, the amount of looks that you can achieve with different actors for head shots, and the amount of space for the actor to move in, which will result in the actor possibly feeling uncomfortable and constrained. This, of course, may lead to the actor and other future clients as viewing you as less professional than you really are.
The absolute minimum that you will need to be able to set up a professional indoor studio for head shots is 4 studio-style lights on stands, a flat white backdrop, and a tripod for your camera. Without these 3 essential pieces of equipment, you will have a very hard time being able to set up a successful studio. Of course, you can add more pieces of equipment as time goes on and you expand. However at the beginning, you will definitely need to have these 3 pieces of equipment because they are required to take a professional headshot.
To start setting up your studio, determine where each light will go based on where the actor is going to be positioned in the room. Typically you'll want the actor to be at least 5 to 7 feet in front of the white backdrop because you need a space for the separation of light from the actor and the background. I recommend you place a small piece of tape on the floor so that when your actors and headshot clients come in, they will have a mark to stand on. This also helps you to determine where to place the lights so that they light up the correct subject.
Each of the 4 lights that you purchase in a lighting kit has a specific purpose. The 1st light is called the key light. This light is designed to fill in the main portion of light on the actor's face. You want to position the key light slightly above the actors head level and at an angle of between 30 and 45° to the right of the camera position. The 2nd light is called the fill light. As hinted at in the title of this light, its purpose is to fill in the shadows caused by the key light. This light will be positioned directly across the camera line from the key light. That is to say, about 30 to 45° off to the left of the angle of the actor. This light can either be placed above or below the actors eye level. Based on the look that you were going for in the image, you may want to position the light higher or lower. The positioning can have an effect on the impact of the shots.
The last 2 lights are less used to light up the actor then to light up the backdrop. The exception is the hair light, which lights up the background a little bit, but the primary purpose of it is to light up the actors hair. The more professional term for this kind of light is called a backlight. Its primary purpose is to separate the object in the foreground from the objects in the background. What it does is causes a rim of white around the subject profile, which in turn causes that feeling of separation. The final light that's used in the studio is solely used to light the backdrop. You'll need a very bright and soft light that is pointed directly at the backdrop. Be sure that there is no spill coming off of this light and falling onto the actor.
In order to set up a good background for headshot, you should be sure to use paper backdrops. Using a cloth backdrop will often wind up in distracting creases. The problem is that if you are unable to iron it every single day, and you take it down once in a while to switch backgrounds, there'll wind up being lots of folds and wrinkles in the sheet. Unless you use a lens with an aperture of 1.8 or wider on a lens of 70 mm or longer and the actor stands at least 6 feet away from the backdrop, those wrinkles will definitely show up in the shots. That increases postproduction time and decreases efficiency.
After everything is set up all that you need now is to set a camera on a tripod and begin shooting. Just make sure that the lights that you are using are all the same color temperature and that you correctly white balance your camera before the photo shoot begins. Good luck!