How Do I Cut A Photo Out

[Lynat]

I have a picture of my daughter that I want to cut out of a .jpeg photo and use in a layout. I thought I asked this once before but I can't find the question or answer so I'm asking again.....is this how I do it?

Use the magnetic lasso tool and when i am finished, what do I save it as? I'm thinking .png but I did that yesterday and today when I come back to work on it again, the background is white. Should I have started with a transparent background?


HELP PLEASE!!!! Can someone give me the steps. I think I sort of had them in my mind but either got them confused or left out a few. Thanks for any help you guys can give me!
Lynita