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In this video tutorial, viewers learn how to set up business letters in Microsoft Word. The first step involves adjusting the top margin from 1 inch to 2 inches. To do this, navigate to Page Layout, select Margins, and then choose Custom Margins, where the top margin can be set to 2 inches. After applying this change, the cursor will move down to reflect the new margin. The tutorial continues with instructions on modifying font style, size, and spacing options to ensure the letter meets professional standards.