1. Import footage
2. Set aspect ratio -> custom ratio -> 1:1
3. Click formats -> mpeg4 -> New Audience Preset -> mpeg4
4. Now set correct settings on preset window:

VIDEO:
Codec: H.264
Frame Rate: depends, but under 30fps
Data Rate: 5000 kbits (HD)
Resolution: 1280x720 (HD)
Method: 2-Pass vbr
Keyframe: same as frame rate
Max Data Rate: 100%

AUDIO:
Codec: AAC
Data Rate: 320
Sample Rate: 44100

FILTERS:
Deinterlace = yes

Note: Make sure your aspect ratio is 1:1 before you start squeezing (compressing)

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