Where you cut should be based on the style you want to make and the intended height of the finished tree. Some people uses ratios of diameter to height as a tool to help design a tree with reasonably realistic trunk proportions. If you were to follow a 1:6 ratio on a tree with a trunk at soil level of 2.5 inches, about 15 inches total is probably a good finished height. I would cut significantly lower than that so you can build taper from successive pruning chops. Maybe only 5 or so inches from the soil. Lower and you can use more chops over time to build more gradual taper. That will take a long time, though.
But you can do whatever you want as long as it achieves the look you want. I’d have an idea of the planned look before chopping anything.