Depending on which route you want to take, there are different configurations

The correct way to configure the timer is to Right Click your timer and click "Edit Splits...". From there, you will want to set your timer to -2.2 seconds. The time to stop the timer is when Peach appears (you can also double check the category rules for when to start and stop the timer).

For the splits, you can have as many, or few, as you want. Some runners set it per-level, I set mine after some key points in 11-exit (Iggy's Castle, Ghost House, Star World, End Game). There are no set rules for how you should set up your split categories. Good luck on your runs!