1. Decide how big you want your seam allowance to be and baste a line around your stitched piece the distance of your seam allowance away from the outside edge:

NB: I've just done one corner for illustration purposes - you should baste the lines around the whole piece.

2. At each corner, where the 2 basting lines intersect, baste a diagonal line across the corner:

This is an optional step - once you're used to mitreing corners, you will probably be able to see the diagonal line without basting it by following the fabric threads but it'll probably help to start with.

3. Fold the corner towards the back of your stitched piece, along the diagonal line, making sure that the horizontal and vertical lines on the folded piece align with those on the fabric underneath:

4. At the point where the 2 lines intersect, fold the edges of the fabric to the back of your stitched piece, along the basting lines:

5. Press well with an iron to hold the mitre in place and repeat for the other 4 corners. At this point, you might want to pin or baste the folds in place until you've completing the rest of your finishing process.

View from the right side of the stitched piece:

6. If you want to mitre the folds on patchwork fabric, you use the same method but instead of basting, use a fabric marker and a quilting ruler and mark your seam allowance all the way around the fabric:

7. To mark the diagonal fold, use the 45 degree angle markings on your quilting ruler, making sure that they run vertically and horizontally when you place the edge of your ruler across the fabric diagonal:

8. Fold the corners in the same way as for your stitched piece: