How is the compass set up before reading it?
Simply line it up. The dial has a North-South line and an East-West line; turn it until one of them lies exactly straight with the mirror line and the axis line. The more precisely it is straight, the more accurate the reading; a crooked setting can read 20 or 30 degrees for the same house.
Related questions
How are the small marks on the compass read?
Each small line is 2 degrees. If the needle falls three lines after North, the tilt is 6 degrees; five lines after North means 10 degrees.
How can I know which direction I am facing?
Use a compass (disha suchak yantra); it shows the direction your face is pointing.
If Google Earth shows 350 degrees, how should North be marked on the plan?
In a regular plot you can set the zero directly at 350 degrees when drawing the straight line. It is easier to think of it as a 10-degree tilt and set off 10 degrees, because that method works from whichever side of the plot you start.
My compass is a different, liquid-filled type. Do I need to buy another one?
No. If it has a straight edge on its side, keep that edge parallel to a wall. A liquid compass that is set exactly gives the correct reading, and it may also show the water level.
My compass showed North tilted toward the North-East, and Google Earth showed 2.39 degrees. Is that also toward the North-East?
Not necessarily. A magnetic compass shows North directly, so its reading can be stated straight away, for example North 30 degrees toward East. Google Earth and the mobile app only show the heading of the line you draw, and North has to be worked out from it; a heading of 2.39 means North lies 2.39 degrees to the left.
Should directions now always be read by degrees?
Yes, always by degrees; reading directions without degrees was a mistake, and only the degree method shows the actual zones.