A. Rex Cauldwell responds: An outbuilding should be treated as a separate building, as opposed to an extension of the house. The takeoff point for the cables to the shop should be the home's main service panel or a subpanel (see illustration, below). There should be four cables feeding the shop: hot, hot, insulated neutral, and ground. (There are times when code allows you to use three cables by combining the neutral and ground in one conductor. I don't recommend that, however, and many electricians, including me, refuse to do it because combining the two conductors could result in a hazardous condition, especially for an electrician working on the circuit.)
The code requires an insulated neutral, which means you can't use common USE (underground service entrance) cable with a bare stranded neutral. You should use four individual insulated cables approved for direct burial. Bury the cables at least 2 feet deep or whatever your local codes and utilities require.
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