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In this tutorial video, we learn how to properly set up business letters in Microsoft Word. First, we change the top margin from 1 inch to 2 inches. This is done by navigating to Page Layout, clicking on Margins, and selecting Custom Margins at the bottom. Here, we input '2' for the top margin and press OK, resulting in an adjusted cursor position. The video also emphasizes the importance of changing font style, size, and spacing options before continuing with the letter preparation. Specific instructions for these changes will follow in the tutorial.