Draw. Your choice how to get the end result of pixel art though- pixel sprites are unique for being in low resolution.

From Wikipedia;

image resolution is the detail an image holds. The term applies to raster digital images, film images, and other types of images. Higher resolution means more image detail

Make a big drawing, scan it with a scanner, scale it down and retouch it in a digital art program like photoshop or GIMP. You could draw digitally from the start but with small brushes. Either way, your end art is going to be in a smaller resolution.

Save whatever you make as a .bmp if you're spriting to make CC mods- it'll be helpful later. Otherwise save as .png . To put it short, the other formats are used more in photography and other work with high-res images that need to be "compressed" so they dont take a lot of space.