fold in half and smooth from the fold- which is your straight edge- the salvages or sides may not match up- which is why you need to square it in the first place. so smooth from the fold with the salvages close to even- sometimes it helps to lay it out unfolded- smooth it flat- then bring the bottom up to the top (creating your fold)then straighten/cut one side edge.
flannels tend to be a looser weave than you are used to working with and stretch out of shape- so smoothing before folding- then smoothing from the fold can help alot. the edges are not going to match up until you cut them to do so.