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In this video tutorial, you'll learn how to properly set up business letters in Microsoft Word. First, adjust the top margin from 1 inch to 2 inches by going to Page Layout, selecting Margins, and then Custom Margins. Enter "2" in the top margin field and press OK to apply. After changing the margin, the next step is to modify font style, size, and spacing options. The tutorial emphasizes these initial adjustments before continuing with further formatting details.