Folk recordings, with the use of predominantly acoustic instruments, requires care and attention. Since the 1960s, when the folk boom began, recording has changed dramatically as analogue, reel to reel, has been replaced by smart digital recording. Let's start with home recording;
Remember, Sir George Martin recorded The Beatles Sgt Pepper in 1966 on a four-track machine and was achieved by bouncing the tracks, In other words, tracks 1,2 and 3, bass, guitar and drums were recorded separately and bounded to track 4, and so on. The early folk scene recorded in a similar way using a TEAC or TASCAM 4 or 8 track machine.
More than half a century later the same process can work on a digital machine. A simple TASCAM DP006 recorder can be purchased for as little as £130 or a BOSS BR800 for £325. There is also the ZOOM R8 8 track recorder for £170. It's amazing how cheap you can set up your own recording studio, but make sure a decent microphone is included in your budget and will cost, on average, from £400 upwards and it's money well spent. Note that guitars in particular, and acoustic instruments in general, are quite 'middley' and many producers roll off some of the mid-range when they record as opposed to waiting for the mix.
When it comes to hiring a studio and letting the professionals do the hard work, make sure you use a studio that has experience in recording acoustic instruments and not just electric bands. Their ears need to be sensitive to your style and they need to concentrate rather than texting their friends while you're playing. With digital recording the number of tracks is almost immeasurable so make sure you don't become over-excited and add orchestras, brass bands and triangle players. Some who purchases your recording will normally want hear what you play at a gig with a possible few embellishments.
Use a click track whenever possible to ensure you do not fall out of time and never record the vocals and guitar together as live because it will make a decent mix almost impossible. Don't worry about mixing whilst you are recording, that will happen later. If you're happy and enjoying yourself then carry on with the next track. Mixing will require a little compression to then lift and enhance the track but that will be the job of the sound engineer but demand it if you want to send your recording to radio stations or the levels may be too low.
Take time with your sleeve design too and always remember to add your contact or website details and be aware, if you are recording other people's works you will be obliged to pay an MCPS royalty at the manufacturing stage, a payment that goes to the composers. If you are recording your own tracks or trad arranged songs then you will not need to pay this royalty.