I hope you are all ready for a real treat Today! I'm going to walk you through my process for creating caricatures using photoshop and illustrator. 
I'm not one to draw stricktly from imagination. That's not to say that I never draw entirely made up things, but if I intend to take a piece of work to a "done" state, I'll always gather as much reference material as I can. 
I start by finding a photo I wish to use. 
In photoshop, I'll very roughly make a few distortions of the photo to try and get a feel for what direction I want to take my caricature.

Once I've decided, I begin my sketch in Illustrator.

After my sketch and I agree sufficiently, I proceed to ink it.

Then I turn off my sketch layer and clean up my line-work.

After that, I block in basic colors. The colors I use at this point really make no difference. Because I'm painting this in Illustrator, I can easily change the colors as I go. I'm not particularly good with color, so I find myself tweaking it about a million times throughout the process. 
When I have my caricature mostly done, I export it to photoshop and add some final details. It can be done in illustrator as well, but it's a more difficult process. Why kill myself when I have options?

And PRESTO! Just like that, you have a beautiful caricature worthy of hanging on your mother's fridge!