Know the script. Break down the roles you are casting. Make a list for the character, their gender, their age and a brief description of the role. If there are any specific descriptors that are critical to your character's place in the film, like race, height, disability, make sure to note them. You don't want an actor showing up in a three-piece suit when the role is for a homeless person. Identify the information the actor needs to be adequately prepared for the audition.
Choose your scenes. Decide what you want to see and hear from your actors during their audition. A page of script is equal to about one minute on screen. Select four or five scenes with different dramatic tone. One scene must be consistent across all auditions, so everyone reading for the same role can be compared using the exact same material. Make lots of photocopies.
Choose a location to hold your audition and rent a P.O. Box to receive resumes. Don't give out your real home or office address.
Advertise your audition. You can place this in your local paper or in a trade magazine. The two biggest are Variety and the Hollywood Reporter, but ad space runs in the thousands of dollars. Backstage Magazine allows you to place an ad for as low as $50. In addition, you can also place advertisements with local community theaters, film and acting schools or on Craigslist. Use the character breakdown information you prepared for Step 1 in the ad.
Separate the headshots and resumes into three piles. One will be the actors you want to call in for an audition; one will be your "Maybe" pile and one is for actors that are simply not right. Sometimes it's great to throw a wild card into the audition. This is an actor that is the opposite of everything you think you want and completely different from what the script calls for. You do this just to see what happens when you throw out your expectations. You would be amazed at the movies that have been cast this way.
Call the actors you want to audition. Give them the time and location. If an actor has representation contact their representative directly to schedule the appointment. Try to schedule actors at 15 to 30 minute intervals, to allow time for auditions that start late or run long. Let them know if you will be providing a scene for them to read or if they should prepare their own.
Provide audition forms for the actors to fill out. These are informational forms, similar to a job application (see link in Resources). It is a good idea to have an assistant available to check the actors in and supervise the waiting room. They will also pass out the forms and pens to the actors while they are waiting and give them their scene pages, so the actors can prepare. It is also a good idea to include a blurb on the form where the actors will consent to allowing themselves to be videotaped if you are planning on recording the audtion.
Set up your location before the actors arrive. Make sure you have a pen and paper for notes and, possibly, a video camera to record the audition.
Call the first actor into the room and have him read the scene you've prepared, or the scene they prepared for you. This is likely a monologue. It is a good idea to have him read a variation of the script you're filming. You don't want to give him the exact script as you do not want him to steal your work. Make notes as to what you like and don't like. When finished, thank him for his time and let him know you'll be in touch. Don't reject anyone at the audition. It's cruel and you may need to back peddle later.
Repeat the previous step until you have auditioned all of the actors.
Review your notes and the audition tapes. If a particular actor stands out, call them and offer them the part. If you are still undecided between two or more actors, call them back for a second audition. It is a good idea at this time to audition some of the actors from your "Maybe" pile as well. If no one is standing out as absolutely "The One", try auditioning one of the wildcards.