If you want something ENGRAVED and CUT
Using your vector software add a .001 red stroke to anything you want to have cut. Everything else will be engraved.
After you have finished with your file save/export it as a PDF and submit.
Stroke line around image
In this example there is a stroke line around the perimeter of the image. The image will be engraved and then cut.
Stroke has been exaggerated for illustration purposes.
The best photos to engrave are those that are high contrast. Images that are dark or have little contrast will not engrave well and can end up looking like a (near) solid color. It is possible to adjust the brightness and contrast settings to make photos engrave better. Often times they need to be brightened considerably. For more information on laser engraving photos view this website. See the examples below.
Original image unedited, Pixabay
Photo engraving on wood from unedited picture
Edited photo (+100 brightness in Photoshop)
Photo engraving on wood of above photo
Edited photo (+125 brightness and -50 contrast in Photoshop)
Photo engraving on wood of above edited image.
As you can see in the examples above the image needed to be brightened quite a bit to see any details when engraving. It is possible that further editing may yield better results. In general this type of image with many different colors and undefined areas of contrast are difficult to engrave. See below for more examples.