Use setting-type for the first coat on this joint and ready-mixed joint compound for all subsequent coats. The main difference between the two is the hardness of the finish and the time it takes for the mud to dry. Setting-type will set, depending on the grade used, anywhere from 10 minutes to an hour and be very hard while ready-mixed can take as much as a day to dry and the finish will be softer.
Use a sharp drywall knife to trim the any ruffles or torn paper on both sides of the butt joint to form a V shape.
It's best to finish all the flat seams before going on to finish the inside corners at ceilings and adjacent walls, otherwise it can be difficult to blend the two different types of seams together.
Start at one end of the joint and unroll the tape over the seam, pulling it taut and pressing down so the tape lays perfectly flat on the drywall. Cut the tape off squarely at the end.
Use crossing strokes with a small inch joint knife to apply about ½ inch of setting-type joint compound over the tape and drywall, from one end of the seam to the other.
Holding the knife at about 30°, immediately skim the excess mud from the joint, starting at one end and working toward the other. Press down firmly to remove enough mud to leave a thin coat over the tape without digging into the fibers. Clean the knife blade on the rim of the mud pan as required. Skim the ridges along both edges to remove any buildup of mud there. Let the mud set before applying the second coat.
When the first coat is completely dry, sand any raised tape-fibers using medium grit sand paper. Go over the tape lightly with a couple of strokes and wipe or vacuum the dust off the wall. Apply a second, thick coat of mud over the tape using a larger joint knife and ready-mixed joint compound.
Immediately skim the excess from the joint using light pressure to avoid bowing the metal blade. Go over the mud a second time, in one complete stroke, to leave a smooth, level finish.
When the mud has dried, check for roughness in the surface and apply a skim coat over the seam if necessary to smooth it. When the mud dries lightly sand with medium grit sandpaper to finish the job.