http://craftydaisies.com/2007/08/24/how-to-square-bags/
Here is how i completed the task.
Here is my basic outside of the bag where i have sewn both the main panels together all around the bag.
Next align the right side seam with the bottom side seam forming a triangle as shown above.
Once you have done this you can chop a little off in order for the bag to sit flat.
Here is the final product showing the square corners on the bag, there are seams coming out from the corners that look a little like darts, however they are hard to see from the photo, you need to be close up in order to see them.
