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.
FORMATTING IN TOOL BAR
Click on HOME - Set for TIMES NEW ROMAN OR TAHOMA - 12 PT. FONT, IN PARAGRAPH CLICK ON LEFT PAGE SETUP, IN STYLES CLICK ON NORMAL
Go to PAGE LAYOUT - MARGINS SHOULD BE ON NORMAL; Go to PARAGRAPH - CLICK ON THE SMALL ARROW IN THE LOWER RIGHT CORNER: ALIGNMENT SHOULD BE LEFT; OUTLINE LEVEL SHOULD BE BODY TEXT; INDENTATION SHOULD BE 0" LEFT AND RIGHT; SPECIAL IS FIRST LINE, INDENT SHOULD BE CHANGED TO 0.3"; SPACING BEFORE AND AFTER SHOULD BE 0 PT; LINE SPACING SHOULD BE SINGLE; DO NOT CHANGE ANY OTHER SETTINGS IN LAYOUT, LEAVE AT DEFAULT.
Go to VIEW: I SET MINE AT PAGE WIDTH TO MAKE FOR EASIER EDITING. LEAVE EVERYTHING ELSE AT DEFAULT.
BEFORE WE SET UP OUR TITLE, COPYRIGHT, DEDICATION ETC., WE ARE GOING TO FORMAT THE BOOK. BEFORE BEGINNING, GO BACK TO HOME ON THE TOOL BAR AND IN THE CENTER RIGHT NEXT TO YOUR YELLOW BOX INDICATING NORMAL YOU'LL SEE A PARAGRAPH SIGN. LOOKS LIKE A BACKWARD P. HIGHLIGHT YOUR ENTIRE FILE AND CLICK ON THAT. NOTE WHAT HAPPENS TO YOUR MANUSCRIPT. LOOKS ODD, BUT IT WILL HELP YOU IMMENSELY AS YOU GO THROUGH YOUR FILE TO FORMAT.
TO BEGIN FORMATTING FILE:
HIGHLIGHT THE TITLE: CHAPTER ONE HOME - IN STYLES GO TO CHANGE STYLES AT THE FAR RIGHT OF TOOLBAR AND CLICK ON ARROW IN LOWER RIGHT CORNER; CLICK ON HEADING 1. REMOVE HIGHLIGHT AFTER THE WORDS CHAPTER ONE GO TO LARGE BOLD FONT. ADD ONE OR TWO EXTRA SPACES, BUT NO MORE. YOU USE CHAPTER ONE, CHAPTER 1, WHICHEVER YOU PREFER.
DO NOT WORRY ABOUT THE ITEMS YOU WISH TO BE CENTERED. WE WILL DO THAT AFTER WE FINISH FORMATTING EVERYTHING ELSE. IT'S MUCH EASIER THAT WAY.
NOW WE'RE READY TO EDIT THE CHAPTER. YOU WILL NOTICE THAT THERE IS A BLACK DOT BETWEEN EACH WORD AND A PARAGRAPH SYMBOL AT THE END OF EACH PARAGRAPH. THAT WILL HELP YOU SEE IF YOU'RE GETTING EVERYTHING CORRECT. IT'S TOUGH TO GET USED TO BUT AFTER A PAGE OR TWO YOU'LL BEGIN TO SEE THE MERITS.
HERE ARE THE THINGS YOU MUST DO:
1. FOLLOW EACH PERIOD WITH ONE SPACE (NOT THE CUSTOMARY TWO) BEFORE YOU BEGIN THE NEXT SENTENCE. (ONE DOT SHOULD APPEAR AFTER EACH PERIOD BEFORE THE NEXT SENTENCE BEGINS.)
2. AT THE END OF A PARAGRAPH DO NOT ADD A SPACE AFTER PERIOD AND BEFORE YOU HIT ENTER. (NO DOTS AT THE END OF THE PARAGRAPH BEFORE THE P SYMBOL)
3. AFTER QUOTATION MARKS THERE IS ONLY ONE SPACE
4. IF A WORD IS DIVIDED BY A HYPHEN AT THE END OF A SENTENCE, BRING THE ENTIRE WORD DOWN TO THE NEXT LINE
5. BURIED HYPHENATED WORDS ARE OKAY, BUT NO SPACES WITHIN THE HYPHENATION
6. EM DASHES ARE OKAY WITH A SPACE BEFORE AND AFTER
7. ELYPSES…USE THREE WITH NO SPACES BETWEEN AND ONE SPACE BEFORE AND AFTER. TO END A SENTENCE, USE FOUR ELYPSES WITH NO SPACES.
DON'T LET THIS OVERWHELM YOU. DO A PARAGRAPH AT A TIME. THIS CAN BE CONSIDERED YOUR FINAL EDIT OF YOUR MANUSCRIPT. I USUALLY SCAN ANOTHER TIME. NOW LET'S FINISH THE FIRST CHAPTER.
WHEN IT'S FINISHED, HIT ONE SPACE, THEN CTRL/ENTER. THAT WILL GIVE THE PAGE BREAK KINDLE NEEDS TO GO TO THE NEXT PAGE AND CHAPTER.
FOR EACH CHAPTER GO DOWN TWO SPACES FROM THE PAGE BREAK BEFORE ENTERING TEXT AND CHANGING THE STYLE TO HEADING ONE. THEN ADD AN EXTRA SPACE AFTER CHAPTER HEADING BEFORE BEGINNING NEXT CHAPTER.
CONTINUE WITH THE REMAINDER OF YOUR CHAPTERS. THEN GO BACK AND GO OVER EVERYTHING TO MAKE SURE NOTHING WAS MISSED.
I AM STOPPING HERE BECAUSE IT MAY TAKE YOU A FEW DAYS TO GET THIS FAR. I'LL POST FOR CENTERING, ADDING TITLE PAGE, COPYRIGHT, ETC. IN A FEW DAYS.