The act of publishing is not as easy as sending a Word document in to a publisher or uploading the file to Amazon Kindle and letting their software do all the work. There are two faux pas that writers make all the time that bug type-setters to death and will make your work that much more troublesome when trying to get your masterpiece into a workable form that looks good in print. These two problems are using tab to indent paragraphs and line spacing.
First of all, if you are using the tab key to indent paragraphs in your text STOP DOING IT NOW! There is an easier way. The second problem is that your text may have a ton of hidden line spacing that will give Smashwords headaches when trying to submit to the coveted Premium Catalog which gives your book worldwide distribution.
Scrivener magically fixes these two problems with a few clicks of the mouse. First, open "preferences":
Then click on the "format" tab:
Do you see that little example text box in the "editor"? Move the top slide-bar over until it is between the "0" and the "1" on the ruler. Then click "Use formatting in current editor." This will automatically indent paragraphs when you hit the return key. Now under "Scrivenings" tick the box that says "separate scrivenings with single line breaks" and that will ensure that there are not any other line breaks between paragraphs or between chapter titles and the first paragraph of each chapter. See example below:
Update: Yet another way to fix indentation within your text is to simply click on the toolbar "Format -> Texts -> Indents -> Increase First Line Indents. Happy indenting!