How I format my books when writing for self-publishing

** Special note from October 2013:  The latest book I uploaded to Kindle failed to appear on the store (at all).  After contacting support, they claimed that my .PRC file from MobiPocket wasn't a valid .mobi file (even though I had already tested it on a Kindle and with their app).  I had to use the .epub file I made from the .PRC file with Calibre (for B&N) to use their new simple converter to get a .mobi file, and then upload that.  So be aware that something's changed with their store.  Also, if you use their simple converter (the Kindle Previewer) on an MS Word document, it won't handle a table of contents or chapters correctly using my method below. **

I've been asked how I format my book as I write, and then quickly have it available for Kindle (and other online stores) as an e-book, as well as sent to Createspace to make paperback copies available.  So here's how I do it:

1.  I have a blank MS Word document I copy for a new book.  I already did the work to set the title page, copyright page, and formatting for chapter headings and body.  Those make later steps far easier.  Here's a link to my blank novel document, feel free to save it and use it.  Here's the link:  http://www.kevinrau.com/files/BlankNovel.doc
2.  Copy that .doc file to a new one, rename it for the new book title.  (I actually use a sub-folder, and occasionally make copies of that for paranoia backup copies, as well as copy that entire folder with all book sub-folders to a USB drive and another PC at home.  Think for a moment if the file of your book got corrupted.  Do you want to chance that?  You might even want to use SkyDrive, iCloud, Dropbox, or some other online storage place to also store a backup, because it would be horrifying to lose them.)
3.  Go to this page to download Mobipocket Creator.  It will allow you to convert a file to Amazon's Kindle .PRC format.
http://www.mobipocket.com/en/downloadsoft/DownloadCreator.asp
    Why go with Amazon directly, and not use Smashwords to send it there?  Because Amazon reports sales by the minute or hour, not delayed by weeks if Amazon has to send the info to Smashwords, who then list the sales on your Dashboard.  They also pay sooner, and you can use KDP Select if you wish.
4.  If you want to upload directly to Barnes & Noble, you'll want to also download Calibre to convert to the ePub format.  Here's the download page:
http://calibre-ebook.com/download

5.  You write your novel.
    a.  Change the Book_Name_Here throughout the blank book.
    b.  Change the Author_Name_Here throughout the blank book.
    c.  Put in a copyright date.
    d.  Write the novel.  For chapter headings, use the style called "ChapterHeading."  On older MS Word versions, you can see the panel on the side if you click the Format menu, then Styles & Formatting, I believe.  New versions you click the Home tab, and on the small Styles section, in the lower right of it is a box with an arrow pointing down and right.  Click that to see all styles.
    e.  For the body, use "ChapterBodyText."
    f.  Use CTRL-Enter to do a page break when done with a chapter and to jump down to the next page.  Use two blank lines above the Chapter Heading, and two blank lines below it before you start your first paragraph.
    g.  Double-click on the Page Header and change "Book_Name_Here" to your book name.  Close the Heading menu to finish editing it.
    h.  Re-read and edit your novel, grammar check it, proofread, etc.
    i.  Find other beta readers to read it and give feedback.
    j.  Have someone proofread it, and possibly copy edit it if you aren't a grammar nazi yourself (Two different levels of editing, proofreading involves correcting your spelling mistakes, commas and some grammar.  Copy editing is more in-depth to find other errors in writing sytle.)

6.  You should end up with your MS Word .doc file, in a printable format for 5.5 x 8.5" paperback size.  Except for needing a cover, you can either Save As a PDF file to upload to a place like CreateSpace or Lulu right now.  If you don't have Save As a PDF in your version of MS Word, download a free "printer" that prints to a PDF file, such as PDFCreator.

7.  Now to make the file for Amazon (Kindle format):
    a.  Load the MS Word file, click Save As, "Web Page, Filtered."  Save it.
    b.  Run Mobipocket Creator (install it if you haven't yet).
    c.  click HTML document on the right side.  Find the file you just saved in 7a.  click Import.
    d.  Click Cover Image on left, then Add a Cover Image button, find it, and make sure to click Update way at the bottom.  Images for INSIDE the e-book like this should be sized about 518 x 800 pixels.
    e.  click Table of Contents on left, then Add a Table of Contents button.  On the "First Level" line fill in:  tag name: "p"  attribute: "class"  value:  "ChapterHeading"   Do not type in the quote marks in the boxes.  Click the update button at the bottom of the page (you may have to scroll down).
    f.  Click Book Settings on the left.  Generally for Book Type you want "eBook."  Click Update button at bottom.
    g.  Click Metadata on the left.  Make sure the Title is correct, fill in your name (Last Name, First Name), publisher (your name if self-pubbing), main subject, a description (e.g. "back cover" text), the price (generally $2.99 to $5.99 for eBooks to get the 70% royalty rate from Amazon).  Click update button at bottom.
    h.  Click Build at the top of the screen.  I always use High Compression.  People have to download these, save them download time/cost, plus, Amazon charges for eBook downloads, so the smaller you can make it, the less they'll charge.  I personally choose "No encryption," but that's your choice.  If someone really wants to break it, they can do it within a few minutes.  It's not worth being a pain to others.  click Build at the bottom.  It'll run, and make a file with your book title as the name, ending with .PRC.  A button should be on the screen to "Open File Location."  Choose that to see the file.

8.  Now, if you have a Kindle, you can email yourself at "_____@free.kindle.com" with that .PRC file as an attachment.  Find the ____ part on your Kindle, I believe it is on the settings, page 3 or so (except it'll say "_____@kindle.com"  You want to use the @free.kindle.com version so they don't charge you a fee to copy it to the Kindle.  Make sure wireless is turned on, on the Kindle itself.  It'll appear within about five minutes, normally.  Now read and check over the cover, table of contents links, and text to see that they look good.

9.  Alternately (or in addition, if you're like me), you can download the Free Kindle Previewer from Amazon to open the .PRC file and view it on your computer.  It's not exact, however, but it's a good double-check.  The download link is in the middle of this page on Amazon:  http://www.amazon.com/gp/feature.html?ie=UTF8&docId=1000234621

A few notes:
1.  If you include pictures in your book, they will look horrible on the Kindle.  There's a trick to improving the image quality, I'll try to list it later, but in a nutshell, you copy your .JPG files to the folder where Mobipocket placed the .PRC.  Then you go into the .HTM file and on the <IMG SRC= ... > lines, you delete the HEIGHT and WIDTH part at the end, and change the filename within the <IMG SRC="" > to be your .JPG instead of what it stuffed in there, which is normally something like IMAGE001.JPG.
2.  If you didn't highlight the entire chapter heading ROW for each chapter in your book, and then click the style "ChapterHeading," then those may not appear in the Table of Contents.
3.  I suppose you can choose not to use a Table of Contents on a novel, but I prefer giving one to my readers.  Your choice.

Now to get it up to Amazon:
1.  Go to kdp.amazon.com.  Setup an account (it's free) if you haven't yet.
2.  Click Bookshelf and choose to add a book.
3.  Fill in the book's information (make SURE to enter something in for the Publisher - they claim it is optional, but it won't show up in some categories properly without one, learned that the hard way...).
4.  Upload a cover.  A good size image is 1650 x 2550 pixels for Amazon.  You may have to find a cover artist, draw one yourself, etc.
5.  Upload the .PRC file you made up there in step 7h.
6.  If *and only if* you want to join KDP Select for 90 days would you want to check that box.  There are pro's and con's to it.  If you do it, you are agreeing not to put that e-book up on other sites for 90 days.
7.  Set your prices.  If this is a short story, or perhaps a smallish novella, a common price is $0.99.  Full length e-book novels generally go for $2.99 to $5.99, and you can choose the 70% royalty rate from Amazon, which is FAR better than the 35% royalty rate you get at any price under $2.99.  I advise some Google searches to see what numerous authors have discovered, and make your own decision.  There are some great blogs about this topic alone.