Video by my ever-awesome collaborator, noahw.
Step 1: Obtain Squid
If you purchase squid, make sure they are still whole- if they're pre-cleaned all of that wonderful ink will be gone!
A fresh squid has reddish-brown spots on a white or cream-colored body- if the flesh has started to turn pink or smell, buy your squid elsewhere. Boxes of frozen squid should be solid, without evidence of leakage or freeze-thawing. Small squid are tastier and easier to cook, but they have less ink.