Lay your design where you want it on your shirt, and then hoop up everything together. If your shirt is super stretchy, like mine, be careful not to “tug” too much on the fabric and distort the weave, otherwise you’ll stitch your design on stretched fabric, and when you’re done, it’ll return to the relaxed state and be all bunchy. The stretchier the fabric, the tougher it will be to keep it from light puckering. Just be gentle. I experimented on a pretty stretchy shirt, just to make sure it could be done.
Remember you can use either a machine embroidery hoop, like this one, or a regular hand embroidery hoop.