Ideally your bin should be sited in a reasonably sunny spot, but not where it will be in the sun the entire day. Whilst warmth is needed for the composting process, too much direct sun will dry the material out. Try to find a level, well-drained spot so that excess water drains away easily and this will also help worms get in so that they can play their part in helping to break down organic waste.
Your bin should be sited on bare soil - this makes it is easy for beneficial microbes and insects to gain access to the material and allows for better aeration and drainage. Try to avoid putting your bin on concrete, tarmac or patio slabs; if you have to do this, then make sure there is a layer of paper, twigs or existing compost on the bottom.
For detailed information on where to site your compost bin see: www.recyclenow.com/reducewaste/composting/setting-your-bin