In Shinto belief, a kamidana is a small shrine kept in the home, dedicated to either a household kami or a distant one, such as a kami from your hometown. Here's how you can set it up properly.
Steps

Seek advice from your local priest. The priest can bless your home and guide you in setting up a kamidana. However, since you're reading this article, we assume consulting a priest isn't an option for you at this time.

Choose an appropriate spot for your kamidana. Typically, it is placed on a high shelf, close to the ceiling, in most Japanese homes. The shelf should be the highest in the room. Ensure the kamidana faces either south or east and avoid placing it in a bathroom. If you already have a butsudana, don't position the kamidana to face it directly.

Buy the Kamidana. If you happen to be in Japan, it's easy to pick one up at a nearby Homeac store. If you're abroad, you can order it from Amazon or other online platforms. The price generally ranges from 5000 to 40000 yen.

Acquire the accessories. These typically include two small saucers, a lidded bowl, two heishi (sake jars resembling vases), a Gautama (water jar with a lid), two vases, and occasionally two candle holders. With the exception of the candle holders, most of these are made of white ceramic. The candle holders are often made of black metal. You may also find two Chinese-style ceramic vases and/or a mirror mounted on a wooden stand.

Prepare the offerings. The typical offerings include two sprigs of sakaki, salt, rice, water, and sake. You might also consider adding white candles for the shrine.

Obtain a kamifuda. An ofuda is a sacred talisman engraved with the essence of a kami. Keep in mind that these cannot be crafted by you; they must be acquired from a shrine. Some shrines offer international shipping for these items.

Place the ofuda within the open doors of the kamidana.

Place the essentials of life. Position one saucer in front of the stairs and fill it with salt. To the left, place the second saucer and fill it with dry rice. On the far left, set the lidded water bowl and fill it with water. These three items represent the essential elements of life that you are offering to the kami.
Place the remaining accessories.heishi

Position the candle holders in front of the kamidana. You can place candles in them, and with that, your kamidana setup is now complete.

Additional options for the kamidana. Many kamidana are housed within wooden boxes, often featuring glass doors for protection. You may also place a curtain in front of the kamidana, typically made of bamboo or purple fabric with a white mitsudomoe symbol. A shimenawa (a rice straw rope) can be hung in front, and shide (folded strips of white paper), often enclosed within the shimenawa, mark the kamidana as a pure space.

Worship at the Kamidana requires changing the offerings daily.
There are various ways to arrange a kamidana; this is just one possible setup.