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Choose the flattest area of the backyard that is closest to the house. To map out the patio space, make sure there will be enough room to walk around your table and chairs with ease (for example make a 10 by 10 patio for a 6-round table).
Level the site is by using a string line and string level (available at any hardware store). Stake out the corners of the patio with spikes (rebar, wooden posts, etc.) Tie the string to one post and loop the string round the other ones to allow the string to slide. Attach the string line level to the string and level up each side of the patio.
Use a sod cutter or a small tiller such as a Mantis to dig up the sod 3 below ground level. Use dug up sod to make beds around the patio or fill in low spots ion the yard.
Rake soil as level and even as possible.
Put down a layer of landscape fiber and sand (use less gravel if sand is a layer) to prevent weeds coming up. Sand should be 2 thick and pressed down with a hand tamper. Put down a layer of landscape fiber to prevent the gravel from sinking down. Try Dewitts landscape fiber held down with fiber pins, both available at garden stores.
Buy bags of pea gravel and spread with a rake to a depth of 3/8 to 1 ½. Garden centers will figure out how much pea gravel is needed according to your patio size.