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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 by navigating to "Page Layout," selecting "Margins," and then "Custom Margins" to enter the desired measurement. After confirming the change, the cursor will move down to reflect the new margin setting. Next, viewers are guided to modify the font style, size, and spacing options to prepare the document before typing the letter. The tutorial emphasizes making these formatting adjustments before beginning the letter-writing process.