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In this video tutorial, viewers learn how to set up business letters in Microsoft Word. The first step is to change the top margin from 1 inch to 2 inches. This can be done by selecting "Page Layout," clicking on "Margins," and then choosing "Custom Margins" to input the desired value. After adjusting the margin, the cursor will move down to reflect the change. The next step involves altering the font style, size, and spacing options, with further instructions to follow. This setup is essential for creating professional-looking business letters.