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Unscrew the cap as far as possible while it is still on the threading. This is to let air escape easily from the bottle and also keep it compacted afterwards.
Place your palms on opposite ends of the bottle, being sure not to screw in the cap anymore.
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L
It is much preferred to not do this with the lid. While it does decrease the volume and make it easier for you, it's harder for thye recycling plant.
The lid means the extra moisture cannot evaporate, which adds together for a 1 tonne shipment of bottles, meaning more fuel is needed for transport.
It also means that liquids inside can mould, which is more difficult to clean in the plant, and much more disgusting for those on the factory floor.
Finally, the lids and bottles cannot be recycled in the same machine in some places, so the recycling workers must remove them anyway. (In my town they can only recycle clear and unpigmented HDPE and PET)
By all means crush it as much as you can (heating PET bottles over the toaster while your bread is toasting makes them shrink), but don't put the lid on afterwards.