Do we have to install SharePoint locally for Office365 development using Visual Studio 2012? or, I just need an Office365 account? Is there an online tutorial for this?
You don't need to install SharePoint locally for Office 365 app development.
Following are packages you should install along with Visual Studio 2012
- Office Developer Tools for Visual Studio 2012
- SharePoint Client Components
- Windows Identity Foundation SDK
- Windows Identity Foundation Extensions
- Workflow Tools SDK and Workflow Client SDK
Check this article for details on developing apps for SharePoint Online
Since most of the customization can be achieved client side I would recommend installing SharePoint Designer 2013.