Correct PSD format for letterhead


I want to create a letterhead for my company, the idea is to use it as template in Word for all the letters we sent out.  I went ahead and used Photoshop to put it together (design it). To create the file I selected the Photoshop preset: US paper, size: letter, 8.5 x 11, resolution 300 p/inch, color mode: RGB color 8 bit, and background contents: white.

I set it up and it looks great on my screen. But when I go to print a sample the image "doesn't fit", it's too wide.  I mean,  my design won't fit on a standard 8.5 x 11 sheet, even tough I chose that size (8.5 x 11)  when creating the photoshop document.

What am I doing wrong? Please help.

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First off, I wouldn't create an entire letterhead in photoshop - I would only use photoshop for any graphical elements such as a logo. That alone should help with the size issue as you would create the photoshop file at the actual size of the image, not the size of the page, and then place it into your word doc.
Second, I would not use RGB color mode, but either grayscale or CMYK as you might need to send it to a commercial printer.
Third, I am not sure if you are actually doing something wrong, as much as it may be a the way that Word handles images.
JackoPintoAuthor Commented:
Thank you for your comments. The thing is that the letterhead, or full sheet I should say, has graphical elements at the top (Logo plus a bar) and another bar at the bottom, which is why I went for photoshop.

Wouldn't that be more difficult to set up in word? Sorry but as you can see I'm very new at all this.

Keep in mind no printer prints to the edge of the paper either so you have to leave room for your margins or when printing you can choose scale to fit
I guess it depends upon where on the sheet you are placing your bars. As jekopper said, no standard desktop printer prints to the edge (bleed) of a page. Most require a minimum of 1/4" - 1/2" margin from the edge of the paper. If you want your elements in that area or to bleed off the edge of the paper, you are (probably) going to need different software (such as InDesign) and to utilize either a commercial print shop or a different printer that prints larger paper that you can trim down to 8.5 x 11"
I agree with BongSoo -- PS should really only be used to create your graphics for the template (just makes life easier that way)!

Here are some good tutorials on setting up a graphic letterhead template in word in case you need them:

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