Color settings are often skipped by self taught Photoshop users and usually people can get away without any knowledge of them. So should you bother getting familiar with them?

The real question is – how serious are you about your work? If the answer is anything else then "not at all", then any additional knowledge benefits you. Basic knowledge of the options here can make your life much easier at some points. Your designs will probably be displayed in multiple places in various shapes and forms, therefore you might want to make sure, that they look they way you intended them to look. The following article will give you a helping hand in achieving that goal.

Let me start off by telling you, that the purpose of this article is not to give you a long and probably boring explanation of all the options and their respective descriptions, but to give you enough knowledge so that you know what you’re doing.

Let's begin with localizing the Color Profiles option.
You can access them from the Photoshop menu Edit -> Color Settings or by using the shortcut CTRL+Shift+K .

The following window should come up:

The default settings most often look something like that. So let's go through with what is what in here.

Working Spaces

RGB
RGB colors are mixed and created in the way monitors use. Therefore RGB is perfect for screen design.

You probably will have the sRGB IEC option set here by default. It's fine for consumer purposes, but does not give you a very rich color palette. It would be a good idea, especially for web designers and photographers to go with Adobe RGB (1998) which offers a wider color range as more colors is what we all want. Don't go panicking if you’ve been designing in sRGB, the difference is not that big, but this profile is created for the less expensive displays.
More and more photographers tend to use another option, the ProPhoto RGB. It has a much broader color range, some of it actually being outside of human vision. Working with that profile however has it's cons, one of them is the fact that converting the color scale to a lower one on images created in using this color profile may lead to unwanted results. So before you choose to go with that one you might want to get some additional knowledge on working with ProPhoto RGB.

Also – don't confuse the sRGB IEC with Monitor sRGB IEC , if you chose the second you might get varying results on different displays.

A big number of desktop printers use RGB values when printing, not CMYK. So have that in mind as well.

CMYK
CMYK in turn replicates the way of mixing colors that big printers use. If you’re designing something with the intent of publishing outside of the screen you should make sure that it looks correct in CMYK Color Profile.

You will want to leave this option here at it's default place at U.S. Web Coated (SWOP) v2 . If you have the possibility of asking for the CMYK Color Settings file of the printer you will use, do so by all means. With that in mind just choose the "Load CMYK" option from the menu and you’re good to go.

Gray / Spot
Leave those at Dot Gain 20%

Color Management Policies

All the values here are the same for all three options, so let's see what they do.

Off
If you choose to turn off the Color Management Policies the files you create will not have the *ICC profiles embedded in them. That may cause your files to vary in color on different displays. It's generally recommended that you leave it on.

Preserve Embedded Profiles
This option will leave the ICC profiles of the files you open. In case you open a file which does not have an ICC profile, it will use your current settings to temporarily embed one. However it will not save the Color Profile to the file.
All new files you create will be saved with your current Working Spaces settings. You can change them in the advanced settings, when you create a new file.

With this option on, you can have multiple files with different color profiles opened at the same time. Photoshop will treat every one of them separately.

Convert
This will convert the ICC values of the file you open to your Working Space settings. However if your file had no ICC profile to begin with, it will remain that way. The new files you create will inherit the values from Working Space settings.

*In color management, an ICC profile is a set of data that characterizes a color input or output device, or a color space, according to standards promulgated by the International Color Consortium (ICC)
Wikipedia - http://en.wikipedia.org/wiki/ICC_profile

Conversion Options

Click the "More Options" button. New fields will appear.

Engine
Adobe (ACE) uses the Adobe Color management system and color engine. In most cases you want to stick with this one, as it's values remain the same across the platforms.

Intent
This specifies the method used to convert color between spaces. The most common used options here are Perceptual and Relative Colorimetric.

Relative Colorimetric – takes only the colors which are out of gamut and converts them. All the remaining colors are left intact, which may result in some color changes on your design.
Perceptual – intent will map all the colors to the closest in-gamut color. By taking all the colors during the process the result should be visually more close to your original design. Your gradients and such will display best with this setting.

Use Black Point Compensation
Better to leave on. If you choose to turn it off, it can have an effect on dark spaces in your design, sometimes with a very negative on your project.
This options ensures that dark spaces in your file are mapped to the closest dark range of the destination space.

Proof Setup

Proof setup goes hand in hand with Color Settings. You will find this option under View -> Proof Setup.

It's purpose is to make your display simulate print or other Color Profiles. The hot key to turning it on and off is CTRL+Y. If your colors are strange, you might want to check if you accidentally didn't turn this feature on. If on the end of your file name there is a backslash with a Color Profile, then you have your culprit.

In the Proof Setup menu you have different preview options.

Working CMYK will simulate the CMYK values you chose in the Color Settings, so you have a quick preview of how your file will look like after print. Why just not convert the image to CMYK all together? Doing that will lock you out of some options and filters Photoshop has. So you sometimes might want to wait and convert from RGB to CMYK until later.

The neighboring options do pretty much the same, but with one plate at a time.

Mac / Win RGB here you can simulate a Mac or Windows display. Can come quite helpful when you’re designing for cross platform purposes.

Custom - if you choose the custom option the following window appears.

Here you can create an additional profile for the proof simulation. The first two options we went through before.

Simulate Paper Color will do as it says – simulate the white shades of white of paper on the screen.
Simulate Black Ink will show you how dark your dark places will be when created with printer ink.

Managing Color Profiles

Check the files ICC Profile
So now that you know how to customize them, you might want to know where to find out what profile is embedded in the file you have opened. You can find that out in the lower left corner of Photoshop. There is a small bar displaying various information, what you want to do, is to click the right arrow and from the menu choose Document Profile, this will display the ICC profile information you seek.

Assigning / Converting Color Profiles
To assign or convert the color profile on the file. You want to go to your top menu and choose Edit -> Assign Profile / Convert to Profile.

That’s basically it. Now you should have the basic understanding of how Color Settings work and how to manage them in your work.