This step is optional as well, but gives a nice finished look to your patch.
Cut a rectangle of your backing fabric with about a 3/8" border seam allowance all around your patch. Press in a 1/4" fold on all sides. Trim the corners at a 45 degree angle passing through the intersection of the two ironed creases. Iron in another 1/4" fold, turning under the first fold you made. Press in the corners so that the edge of the crease intersects the new corner intersecting folds, then press in the sides again. You should end up with nice mitered corners. Place the patch inside this frame and topstitch around all edges for a nice complete patch.