You need a level 2 embassy to start you own alliance. 
When you create it you become the Chancellor of the alliance. 

Once it is created you can advertise for it in chat
(please don’t do so more than once per 5 minutes).

You can also accept and invite members from the Members tab.
(click invite to alliance and press “Player Search” to look them up).

Once you have members you can choose to promote some to officer or Vice Chancellor positions.

Officers get the mail that is sent to the alliance,
Vice Chancellors gain the ability to set attitudes for the alliance,
and
both positions can accept and remove members.