Keep the flanges in place in all areas except where the tiles sit on the tub and the ceiling; you'll be using caulk around this area so you don't want the flanges visible. You can cut the flange off easily with a utility knife. Look through your box for scraps without a flange to use fewer tiles. While theoretically you might need to cut the flanges off where the J Trim is installed, in those instances we already had cut off that side of the panel to fit. The raw edge was covered by the J Trim.