How is the entrance of the month of Ramadhaan established? 
The entrance of the month of Ramadhaan is established by the testimony of two men; they testify that they have sighted the crescent. If the crescent is not sighted, we complete the month of Sh’abaan thirty days, then we fast.
The Messenger of Allah, may Allah exalt his mention and grant him safety, said:
The month is twenty-nine nights. Do not fast until you sight the crescent. If the sky is unclear, complete the month thirty days.
[Collected by al-Bukharee, #1907]
In the Collection [of Imaam Ahmad] it states:
If two Muslims sight the crescent, begin the fast and end the fast.
: See “Twenty Questions for Children on Fasting, Laylatul-Qadr, and al-Itikaaf”, by Arafat bin Hasan al-Muhammadee.