When making a block, if it is to be 12 1/2" do you square it up before putting the sashing on it? Then sew them together?

Yes, I square them up before adding sashing. However if they don't square up nicely, you can use the sashing to help make your blocks all the same size. You would just need to add to all 4 sides and then square them all up the the same size.

I usually square my blocks up first.

I square mine up first. If they are undersized, I dampen/starch them and block them (tug them into shape and pin to dry)

If squaring them up is going to make you lose your points, then I would add the sashings and then square them up.

Yes, square up 1st.