Notepad is the most basic text editor (thus making it most suitable editor for this purpose).
Open a fresh Notepad and hit ‘Ctrl+V’ to paste the text. Hit ‘Ctrl + C’ to copy the entire text on clipboard. Open the extra copy and hit ‘Ctrl+A’ to select entire text on the document. Place the original document somewhere safe. Save an extra copy of the document as a backup (in case something goes awfully wrong). Paragraph Spacing: You may use first line indent method or block paragraph method, in both cases you should have Line Spacing set to single or 1.5 and the At: option should always be blank. If you’re using First line indents, for centered text you may want to create a new custom style which shall remain exactly same as Normal, except it doesn’t have first line indent. Trailing space (Only when you are using Block paragraph method): Instead of choosing first line indent in Indents and spacing, choose Spacing > After > select 6pt (optimum). First line indent: In the paragraph options > Indents and spacing > Indentation > Special > Choose first line indent and select 0.3” (optimum). To separate paragraph use either of the two methods-first line indents or block paragraph method. Paragraph: Keep alignment left and right and left indentation 0. Headings – Select from menu bar, preferably Heading 1 for the chapter names, heading 2 and further for any other heading required through the book. Font color should be automatic (and not black) that would appear as black in your document, but may be colored for other devices’ default. Keep the font size 12, font face as times new roman (or, anything clear, readable and not too gaudy). Fonts: Normal – Select from the menu bar, and modify. In short I would tell you the final preferred settings. You may read the Smashwords style guide in details to set Font, Paragraph, and first line indents etc. For the older versions (2000 & 2002), you may go to Tools menu > AutoCorrect > click on “AutoFormat As You Type” tab and then uncheck most of the boxes, and then click on the “AutoFormat” tab and uncheck the four boxes under “Apply” Good news is that newer versions (2007 & 2010) of Word have it off by default. They might be helpful in some cases, but here they mean only trouble. Turn off word’s autocorrect and autoformat features completely. Open a fresh Word file and keep the settings as follows In this article I am going to explain how I format my books in few simple steps. However, let me tell you a fact: formatting the e-book to pass the meatgrinder is a very easy task. 
It may seem to you that your e-book won’t ever make it through the meatgrinder. If you don’t want to spend those extra buck on getting your book formatted you may read ahead to do it yourself.
Now, for those who aren’t well acquainted to the MS Word (or, any other editor they may use to write) even with the smashwords’ guide it may seem a gigantic task. Though they haven’t paid service to format the books, they have a list of paid services to format your e-book for a fee. Smashwords has even made available a detailed Style guide for such writers to get their book formatted perfectly. Why, the smashwords’ meatgrinder rejects the manuscript straightway if not formatted appropriately. It might prove to be a big headache for a first time writer to get his/her e-book published at smashwords.
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