It's really up to you how you set it up. The timer is just for you really. Helps you see how your doing. When it comes down to it for major World Records, mods will frame count or manually check the time themselves.
Have as many or as little splits as you'd like. I can post a picture or two of some simple ones I have set up later today.
If you think you've got it, you've probably got it. There is no "setting it up to be official".
Unless there's a specific problem you're having I'm not really sure what kind of answer you're looking for here.
Thanks for the replies. I'm getting there. So for this game there doesn't appear to be any auto splits so that's fine. I can just set up a few to my liking and hotkey them during a run. I'm able to do a screen cap with OBS of the game with LiveSplit overlay the way I like it but I can't actually see LiveSplit over my game when playing. I'd like it to be that way and just record the screen.
Can you play the game in windowed mode scaled to your screen size? You could probably make livesplit semi transparent and just put it over top the window.
Livesplits overlay still works if I'm in windowed mode but not in borderless. Not really keen on sharing my taskbar etc. There's got to be something I'm missing.
EDIT - OK. I Think I got it. If I launch the game in windowed and than switch it to borderless it seems to work. Will report back after further testing. EDIT 2 - Got it sorted. Thank you for your help and for patience with a noob like me.