This is taken directly from my handout used during workshops I directed to help writers format their book manuscripts prior to uploading to Kindle through Mobi Creator.
Make a folder in your Documents titled Kindle and transfer your Word Document for your book to that folder. If you have used spaces or the space bar to make your indents, or any other odd formatting, save the file into a text file such as RTF of Word Pad, the copy and past into a new Word Document and label that file with your book title in the folder titled Kindle.
For just a minute, let me explain why you have to do this. Have you opened a Kindle book that had crazy formatting. Stuff that didn't belong, spaces or indents where they didn't belong? This is because the author did not clean up their file prior to beginning formatting. Saving your manuscript in the way just described will clean it of most of these problems. The others you can clean up when you do a final read through. Once you've done this you are ready to format your manuscript so it will produce a professional looking book in Kindle. (more…)