Usually we recommend to order a separate VPS for that purposes, and setup it in the same way just if it was a regular server.
The only glitch is that you can't access your development version of the site by IP because the license is tied to your domain, and you can't access it by domain because it's routed to the live version of your site. The solution is to point your computer to use a different IP for your domain name which can be done by editing it's hosts file.
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