Either procedure will work, however the choice is yours to make. I am not sure what you are building, but, if you elevate does it pose a problem with a higher step? If you dig out then you may have to continue digging to have an equal depth for your whole concrete pad.
Squaring: It is done with string and stakes. You are going to create a triangle. Place a stake with a string on the corner of your house and make a mark on the string at 4 feet.Go along the side of your house and place the peg at the 3 foot mark and tie a string on the peg and make a mark at the 5 foot point. Pull the 4 foot string straight away from your house. Now bring the 5 foot string over and place it on the 4 foot mark. You are now squared. Drive in another peg to mark the spot. Wish you paid attention in Geometry class, eh!

Thanks DR Home
Ibelive your referring to the 3 4 5 method
i am familiar with this procedure.
I was kinda looking for info on setting up batter boards and how far away they should be located away from actual building lines.Can strings on batter boards establish a level grade for the actual forms? If so how?
THANKS AGAIN

Forgot to say that i am building a small barn