3.1 or 2.1 Home Theater setup for desktop

To add to this. Seeing as 1000 isn't necessarily enough to build a whole system. Any recommendations on a start to building a whole high-end system. Maybe like a DAC, amp, and two bookshelf speakers with a path to get a sub later or DAC w/ amp and speakers with a path to later get a better amp and sub? This is all new to me, got a lot to learn so any help is appreciated.

@lalitk - "thatcdac" stated that these would be used on a desk and titled his post "desktop".  In a later post he somewhat confirmed his position on computer because he does not want to use an internal sound card on his computer because of technical reasons.  This leaves only the option of a USB DAC with a volume control.  I do not see anywhere that says this is a normal TV/entertainment setup.

@thatcdac - I agree that tube amp is not really recommended here.  You could go that direction, but the budget is going to be more like $1500, and that does not include a subwoofer.  Also, tube amps are going to be low power and tubes will start to saturate once they get past half of their power rating.

I'll repeat my initial DAC suggestions here (they are in the $500-600 retail area, but can be found for less used):

Parasound ZDac
Cambridge Audio Dacmagic Plus

The Parasound ZDac has a better stock power supply (internal linear power supply), but ZDac can only support audio files up to 24/96 resolution on the USB input (24/192 is not supported).

Cambridge Dacmagic Plus will support the higher 24/192, but comes with an external switching power supply adapter.  So the stock sound quality will not be as good as ZDac, but you can always upgrade this to something like a Teradak linear power supply (another $200-300).

For speakers, the easiest solution is to get powered monitors (speakers that have the amplifier built in).  My own personal recommendation is the Yamaha HS5, which retail for $400 a pair.  You can look at others if you want.  Then just get a couple of XLR cables and connect the DAC directly to these speaker - and you're done. 

Cost for this solution is about $1,000 (or just under).

Alternative, you could do a set of normal speakers and an amplifier here, but the budget is likely to go over $1,000 (probably something like $1200-1400).  Low cost amps are stuff like Parasound Zamp ($350) or Emotiva BasX-300 ($399).  Plus speakers.  A low cost bookshelf speaker that still sounds very good would be something like Elac Debut 2.0 B6.2 at $349).

These are just different ideas on approach.  With these two DACs, you can always add a subwoofer to the system later on at any time.  A really nice reference subwoofer for the money is Rythmik Audio L12 for $559.  It's not really huge compared to other subs (14" x14" x 15.5"), but Rythmik is one for sound quality.  There are smaller subs you can get and also cheaper subs.

Seeing as 1000 isn’t necessarily enough to build a whole system. Any recommendations on a start to building a whole high-end system.

Already gave you exactly what you are asking for.

Plow your entire budget into the best most efficient and easy to drive bookshelfs you can find. Run them right off your PC until you can afford a tube amp. Integrated. Build from there.

Forget tubes at this price level and forego the center speaker, which will allow you to use a stereo amp and put more $ toward better L/R speakers. Plus, listening in the nearfield you’ll unlikely need a center speaker anyway. I’d get a PS Audio Sprout100, which takes care of your amp and DAC, and a pair of Silverline Minuets. Used you’ll be under $1000 and new $1300 and then just add a sub later when funds permit — for your application I’d get an SVS SB1000 that’s $500 new. This will give you a legit full-range 2.1 system that sounds amazing, and if you upgrade the amp/DAC later (tubes or otherwise) it’ll get even better.

If this is still too too pricey you could go with Wharfedale 11.1 Diamond speakers for $300 (on sale at Music Direct) and it’d still sound pretty damn good. Hope this helps, and best of luck.

I strongly agree with @soix .  I would start without the center speaker in such a small setup.  You can always add one later as funds allow if you really feel the need.  I use the Silverline Minuets as fronts in one of my HT systems (with a Silverline Center and a Paradigm Sub) and the result is great.  A tube amp will eat a lot of budget; save that for later and you can still have great sound