How is Kiddush recited on Friday night?

The Shulhan Aruch (O.H. 271:1) writes that when one returns home from the synagogue on Friday night, one should immediately recite Kiddush. The Mishna Berura (M.B., O.H. 271:1) mentions that if one is not hungry when one returns, one may wait to recite Kiddush since one already sanctifies the Shabbat during Arvit. Notwithstanding, the Mishna Berura adds that for the sake of one’s wife, kids or guests, one should not delay Kiddush and the ensuing meal. Accordingly, if one sees that one’s wife or guests may be hungry, tired or the like, one may forego all the introductory portions of Kiddush, such as Shalom Alechem, Bar Yohai or Azamer Bishvahin and recite them after Kiddush.

The Rama (ibid:10) writes that it is preferable to sit down while reciting the Kiddush of Friday night, and only briefly stand up at the beginning in honor of Hashem. The Kol Bo explains that since Kiddush must be followed by a meal, it is proper for Kiddush to be recited in a way a meal is conducted, that is, sitting down. The Vilna Gaon (M.B 46) offers another explanation  that when Kiddush is recited standing up, it lends itself to those present to move around and not have the requisite concentration or decorum for this Mitzvah. Indeed, the custom in many Ashkenazic communities is to stand during the verses of “Vaychulu” but then sit for the remainder of Kiddush. Nevertheless, the Sephardic custom, based on the Arizal, is to stand for Kiddush on Friday night (c.f Peri Etz Haim Shaar Shabbat 14, and Kaf Hachaim ibid 62). It goes without saying that at synagogue or other gatherings, in which there is a tendency for people to move about and socialize, those present should stand still and listen intently to the one reciting Kiddush.

As for the actual drinking of the Kiddush, however, one should sit since the Gemara (Gittin 70a) explains that drinking while standing damages the body. (c.f Ben Ish Hai Shana II, Bereshit 29).

Summary:  One should recite Kiddush as soon as one returns from synagogue on Friday night. If necessary, one may skip the introductory portions of Kiddush. Kiddush of Friday night is recited standing. The Kiddush is drunk sitting down.