You have added challenges that alot of folks don't have to deal with. When you homeschool and run a business from home, you're getting the double-whammy! There is probably very little time where there isn't someone at home...well...making clutter! As the kids get further along in their schooling, you're going to find out really quick that the clutter is going to explode. Each year you will acquire more curriculum/books, art supplies, files and records and so on, and so on.
This is why I have to disagree with hubby. I think buying new furniture with a real strategy and space saving plan in mind could be the solution, or at least help reduce alot of mess greatly.
Part of the problem with clutter is, your things don't have a "home". I suggest you begin by going through your things and get rid of anything you don't use anymore, or can't use anymore. Be careful to not fall into the trap of rationalizing why you "need" to keep something. Be honest with yourself, and if you know there is no way you're ever going to use that 1970's Ronco sandwich grill again, it has to go! Don't say, Junior might want to use this to make his own homemade "Hot Pockets." You know there is no way Junior will ever want to use it. So get rid of it! And for sure avoid feelings of sentimentality and attachment.
If there is something you inherited, and it's just eating space, useless or an eyesore, but you're keeping it because it was "Mom's" give it away to another relative who may benefit from it. In fact, have the relatives over for a "give away" and let people take any family heirlooms or hand-me-downs you don't need or want. At least it stays in the family, but not in your basement or garage.
Next sort through everything from clothes to kitchen ware, toys, papers, stuff in the garage like old tools, old appliances etc. Attempt to purge all areas of your home.
AFter the dust settles, and everything is sorted or off to the Goodwill etc. sit down and look at the storage needs of your house.
Think about all of the things you still have and decide how and where you will store it, and then procede to find new furniture and storage to accomodate these things. Your motto and mantra should be.."everything has a home, and if it doesn't it must go". If you can't assign a valid "home" where it will not be crazily stored, or forced into an awkward spot you will have clutter. But if a particular item can be happily stacked and neatly and securely stored you will be clutter-free.
The key is, everything you own has to have a "home," and it has a curfew. Everynight, the family should pitch in and put anything that has wandered from home, back to it's place. The benefits? Everyone will know where to find things when they need it, the house will stay clean, and very few things will go missing or get damaged because they'll be properly and safely stored.
IKEA is a great place to shop for multi-purpose furniture. If you have a family room, you might consider purchasing one of their couches with underseating storage, a wall storage unit, ottoman's with storage, and so on. Consider purchasing storage cabinets for each child's room to manage toys. If they're not disciplined enough to keep their rooms neat, buy cabinets with locks and create a library-style toy check out program. They can only take out 3-5 toys for the day, and have to put them back at night. You could allow for a trade-in or two in case they get bored. But this will greatly reduce clutter.
If you have a room dedicated for school, invest in furniture that folds up and can be stored when school is over. Use card tables for school tables, folding easels for writing boards, invest in a good wall-storage unit and reserve a portion for reference materials and create your own simple library system. Another section can be for manipulatives, and resources. A third section can be for current books and lesson folders etc.
Be sure to invest in good storage now for records. Dedicate a safe dry place to store them. I highly recommend a fire-proof file safe for official records to be filed with the school district etc.
The last key is to devise a maintenance plan after you redesign the home. Each night, the family should pitch in and help straighten up the home. As you plan your home makeover, make sure the house will be easy to cleanup. AVoid complicated decor. Once again IKEA is great for this too. If all you need to do is toss the pillows back on the couch, and toss the tiddlywinks in the ottoman at night, voila! You're done! And the best part is, even the 1-year-old will be able to help, because it will be that easy.
Good luck. I know I ramble, but there is stuff in here that I've done and it works! It really and truly works! :)