We've blogged about why you should do it and how it benefits your own writing. But if you've never been a beta before, you might not be sure how you do it. Depending on how well you know the writer you'll be betaing for, it's a good idea to decide on a few things before you start.
Line Edits or General Feedback
General feedback usually means a writer is looking for an overall feel of the book--if character arcs felt completed, if there were any plot holes, if the pacing was good throughout. Line edits (like copy edits) take a little more time and focus. Line edits usually include word choice, grammar, punctuation, paragraph breaks, out of character dialogue or thoughts, etc.
Once you know what the writer expects from your beta keep a few things in mind.
Most people use the review tab in MS Word to leave comment bubbles for the document. Some people use the highlight function to indicate where they think a paragraph break should go and change font color to red for spelling errors or incomplete sentences. Whatever way you choose to beta, make sure you're consistent throughout the document.