Are you trying to save a transparent image like a circle without the square around it?? Can't be done. You can save it as a transparent .gif or .png by using Save for Web and tell it to make the "transparent" part the color your background is going to be, but it's still a square (or rectangle) image, just that the non-circle part is whatever color you told it to be.
You can start a new document in Photoshop with transparent background, and it will maintain the transparent background while in Photoshop and save it for the next time you open it in Photoshop, but the whole canvas will be saved and I think if you flatten it, the transparency will be lost. Even if an image appears transparent in Photoshop, it may not appear transparent if opened in another application unless you save it as a transparent .gif or .png.
Remember that if you're working with layers in Photoshop and you flatten the image, all your layers will be lost and if you were not finished working with the separate layers, you won't be able to separate them again.
An excellent resource for Photoshop and other image editing applications is
RetouchPRO.com
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