To create a new SharePoint Group:

In the Name and About Me Description section enter a name for the new group in the Name textbox.

Enter a short description in the About Me textbox. This will be displayed next to the group name when the group is presented.

In the Owner section you can update the Group Owner. By default this is set to you as the user creating the group.

In the Group Settings section specify who has permission to see the list of group members and who has permission to add and remove members from the group.

CAUTION:

If you set the Group Settings to allow only Group Members to view and edit the group membership, members of this group will not be available for selection on a workflow start page that prompts for users if the workflow initiator is not a member of the group.

For viewing, the options are: Group Members and Everyone. By default this is set to Group Members.
For editing, the options are Group Owner and Group Members. By default this is set to Group Owner.

In the Membership Requests section you can specify whether to allow requests to join/leave the group and whether to Auto-accept the requests.

For both the options are: Yes and No. By default both are set to No.

If you are on the root site or on a subsite that was created with unique permissions, the Create Group screen will contain an additional section titled Give Group Permission to this Site. This section will not be presented if you are on a site that does not have unique permissions.

Here you can specify the permission level that you want the group members to have on this site.

Tip: If Employee Records is activated, an additional permission level, Quiz Author Contribute will be listed.

The options are:

Full Control – Has full control.
Design – Can view, add, update, delete, approve and customize.
Contribute – Can view add, update, and delete list items and documents.
Read – Can view pages and list items and download documents.

Click on the Create button.