Do I need special software or something to do this? Hasa nyone seen a tutorial or something I can use to learn how to do this. Thank you!

Thank you so much for the help!

There are a number of frames in Designs by Cuties, made especially to be used as patches. You sew the first to 'colours', then add your design and then sew the last colour. I put colours between ' ', as they are really given a different colour to make your machine stop.
Have a look at one of the patches I uploaded, read the instructions and you know what I mean.

Try this.

You can emb. it on a sheer fabric like a chiffon and then cut it out. Just take care not to cut the thread. The fabric will act as a base to hold the stitches in place.