How to Cut Out the Subject
When cutting a subject out of their background, there are different techniques based on the complexity of the background. If the subject is photographed on a simple background similar to the image in this tutorial, simple selection tools like the Magic Wand Tool will work well.
After making a rough selection of the subject in a photo, use the "Select and Mask" tool to refine the edge of the selection.
Add a Splash of Color to the Background
Once the subject is cut out from the background, the possibilities are endless. From here, you can add another photo as the background of a photo, or a simple colored background to simulate a studio photo.
To create a colored background, go to 'Layer - New Fill Layer' and choose a color. Place this layer below the layer with the subject and the new color will appear behind the subject.
To add a bit of realism, add a vignette to the borders of the photo. Go to 'Layer - New Adjustment Layer - Hue/Saturation' to create a Hue/Saturation. Lower the lightness and saturation then use the elliptical marquee selection tool to create a selection around the center of the image and fill the selection with black. To make the vignette more realistic, add a gaussian blur to the layer mask.