Seems odd we are stuck in a cubist canvas world in photoshop.
By @Dpmatlosz
This is not anything specific to Photoshop. The fact that image file formats define the image area as a rectangle is going to happen with any photo application you use, from any company.
But several replies have already shown you the answer. Although image file formats are rectangles, the key is to take advantage of transparency. With transparency, you can make any area outside a shape transparent when placed over another background. So if you want a circle, you apply a mask or alpha channel with a circle shape, and everything outside your circle becomes transparent, so it appears as a circular image.
Just keep in mind that not all file formats support transparency. You can preserve transparency you create in Photoshop with a mask or alpha channel if you save or export it using Photoshop (PSD/PSB/PSDC), TIFF, PNG, and GIF formats. But the popular JPEG format is one that cannot save transparency, so if you tried to save a circular image in JPEG format, it would have a solid, unremovable white background.
So who can guide me in how to make a circle canvas without jumping through 5 clicks and 10 different clean up tools.
By @Dpmatlosz
Photoshop actually makes this easier than in a lot of other applications. It can be as few as 2 steps, with no cleanup needed:
1. Create a circular shape using a selection tool or path drawing tool.
2. With a layer or group selected, create a layer mask from the selection, or create a vector mask from a path. There are several one-click ways to do this, with commands such as Layer > Layer Mask > Reveal Selection, Layer > Vector Mask > Current Path, or clicking a button in the Layers panel.
That’s it. Everything around the mask is now transparent, leaving whatever shape you drew as the outer edge, with nothing outside it.