Babies are so pure, so tiny and so perfect, I don't like to do a whole lot to my newborn portraits while processing. I prefer to do a very simple, clean edit that is warm and natural.
I first open my image in Lightroom and make basic, minor adjustments to white balance, exposure, contrast, color balance, etc. until what I am left with is a correctly colored, well exposed image. I adjust these things in camera when I am shooting, so typically I don't have to change much. When I first started out, I made a lot of mistakes that I would have to fix during the editing process, but I have worked hard at improving the quality of my images straight out of camera to cut down on editing time. I intentionally underexpose a tiny bit to prevent blown highlights on fair skin or white clothes.
Tip for shooting in natural light: Always remember to continually check your histogram/preview on the back of your camera while shooting in natural light, because if a cloud moves in front of the sun that is streaming through your window, and you don't pay attention, you're going to end up with a whole bunch of images that are way underexposed. Or the opposite may happen, it may brighten up outside as the sun comes out, and you could really overexpose a whole string of images. Both are a pain to correct and sometimes can cause issues that are difficult to fix, such as severely blown highlights or excessive noise.
One helpful tip when trying to achieve natural, realistic color is to look at the backdrop in person and see how it compares to what you see on screen. Sometimes it's hard to remember exactly what skin tone the baby had, but you should still have your newborn blankets with you, so you can use that as a reference to see if your color is right. You'd be suprised how much a blanket can change color when the white balance is off, or when you change the camera profile. This is super helpful if the baby was especially red or jaundiced. You can also use a white balance card, but I usually still end up adjusting my color as well as the white balance, and I always forget to use the card, haha! It's easier for me to eyeball it based on both skin tone and the color of the blanket.
Once you have a clean, well exposed image, then you can begin taking it one step further with what I like to call "polish." First, I run the image through the Portraiture Plug-in. If you use Portraiture, don't make the newbie mistake of running it on "full power" or you will turn your newborn into a fake plasticy looking baby. Move all the sliders to the minimal setting and then adjust them until they just barely remove splotchy skin tones. After portraiture is done, I open the image in Photoshop, zoom in at 100-200% and meticulously clone out or heal dry flakes of skin. I don't remove every detail, because I don't want the baby to look fake, but I do remove the larger pieces of dry skin, particularly from the face. I also clone out any blemishes or splotches using the frequency separation technique to preserve skin texture. What I do not touch are birth marks. My rule of thumb is, "will it still be there in 2-3 weeks?" If the answer is "yes," I leave it alone. I also take the time during this step to remove blanket fuzzies or snags that I missed picking off or hiding during the shoot.
Color Tip: Set your camera profile in Lightroom to Camera Neutral v4, which will make the overal image quite bland at first, but it will give you the perfect canvas for selectively adding contrast and color just where you need it. Global adjustments can often negatively affect skin tones, making them too red/orange.
After "cleanup," I start working with color in my image. I really like using Pure Photoshop actions to streamline this process. I use the Purely Studio action set, which I really like. I like using the Cream action to brighten up and remove redness from the babies skin, as well as add just a touch of contrast and warmth. I use the Studio Pop action to selectively add contrast to the blanket and deepen the color just a touch. Please note, I know how to do all of these things without using an action. I wouldn't recommend just using an action without learning how to manipulate the photo manually first. If you don't know how the action works internally, you won't be able to effectively adjust it for individual photos and situations. That said, I am no expert at recording complex actions, so the $50 was well worth it to me, considering how much time it has saved me in post processing!
Depending on the photo, I may also fade the blanket with a bit of blur and a soft photoshop brush. The Blanket Fade action is perfect for this, once you get the hang of how to use it. It adds to some images, but not all. I just go with my gut. I work with layers, so if I make an adjustment and I change my mind, all I have to do is delete the layer and I'm back to where I was. I also frequently create snapshots between steps to quickly go back and forth between different adjustments to see the effect they have and whether I like it or not.
Above all, a good artist knows when to put down the brush, or in this case, close Photoshop! Take baby steps and don't overdo it. Only remove what you don't like and showcase what you do: what you'll be left with is a beautiful timeless image. My advice is to avoid trendy editing techniques (selective color, let's please bury that trend!) that distract from the baby.
Looking for more newborn photography & editing tips? Check out this awesome list of tutorials on I Heart Faces: http://www.iheartfaces.com/2012/07/newborn-baby-photography-guide/