#1 - Go in "Formats" and set your camera to shoot Most Compatible and not High Efficiency.
By default, the iPhone is set to take photos in "High Efficiency" format. This creates compressed photo files with .heic at the end.
When you switch to "Most Compatible", the iPhone will create JPG photo files with .jpg at the end.
Although High Efficiency .heic files take up less space, the file is not universally recognized. For example, when moving image files from Apple devices to PCs, .heic files are not supported. The .heic files need to be converted to JPG to be accepted by PCs, complicating the transfer process.
For this reason, I prefer having my photos created as JPGs, to avoid running into unexpected compatibility issues.
JPGs do take up more space than .HEIC files, but I'm ok with that because I regularly backup and delete my photos off my iPhone as part of my file management process.
Which file format offers better quality?
High Efficiency image files have better quality, but when you do a side by side 100% zoomed-in comparison, you can't see any quality difference. For this reason, I'm ok to stick with JPGs.
Where it does matter is if you edited and re-edited a jpg over and over again. JPGs degrade, while .heic files retain their quality much better.
I don't edit and re-edit jpg files (my Lightroom Mobile editing process prevents this!), so I'm safe to stick with JPG files on my iPhone camera.