How do create rounded Retacgular in Photoshop:
1. Click on the rectagular tool
2. In the options bar, select rounded rectagular tool
3. Select Radius size( i use 40px)
4. Pick background color (e.g. if your bgcolor is white, pick white).
5. Create a rounded rectagular box
6. Go to Path Selection Tool
7. Use path selection tool to select the rounded rectagular box
8. In the options bar, subtrace from the shape area.