I was writing this cheat sheet out for a friend recently, and figured - hey if it's useful to them, it may be useful other people too. Basically, this goes into places where you probably should add a paragraph break in order to help keep readers grounded in what's actually happening, creating emphasis where you needed, and help break up larger/harder to read walls of text.
Note that this list is more about base readability/understanding. There are always going to be exceptions, especially when taking into account writing style - like any advice, these are more of guidelines than actual rules. (cue pirates of the carribean)
Always add a paragraph break for:
State of motion is changing
Ex: character is switching from observing surroundings to running for their lives
Basically, if you’re switching from being still to moving, or moving to still, break paragraphs
Why: mostly, it helps keep the reader grounded. A paragraph break is almost like a signal of "okay we're doing something different here" which can be useful when your protagonist is doing an array of smaller actions in a scene.
Thought shifts
Ex: character is thinking about their dead mother, to thinking about what caused the explosion that killed her
Each topic gets its own paragraph. When in doubt, add a new paragraph
Why: if a character is lost in their own thoughts for a while and you don't break, it will result in an impenetrable wall that most readers will skip because.... no. Transitions between ideas are just natural places to break, and again, they help with grounding readers.
(several more list items below the cut, and when to do a double paragraph break)
New character is talking
Yes, every time.
Only exception: two characters say something at the same time, and you indicate as such
But other than that. ALWAYS break for a new character's speech
Why: firstly, it's standard, meaning most readers are going to expect it, and will likely get confused if you aren't paragraph breaking. But other than that, it helps to break up giant walls of text that might happen in a conversation, for example, and it makes conversation followable, so that you don't have to put dialogue/action tags next to each new line of dialogue for it to be clear who's talking
New setting
Ex: character exits a building.
Any time you enter a new setting, spend some time establishing it. If it’s a setting the characters already know, you don’t have to do as much - just let readers know where the character is in relation to it at the very least. If it’s somewhere new, describe things as your characters notice them.
Why: a break helps establish a transition. Without it, it can grow confusing where the characters are, and if you're confused about where they are, you're almost certainly going to get at least a little bit lost about what's going on overall.
New time
Ex: switching from summarizing the characters day to showing what’s happening now
Ex: switching from what’s happening now an hour ago, to what’s happening now, now.
Why: same as above, but for time. Rather than getting confused about where characters are, it's just as easy to get confused about when they are.
Emphasis
Don’t do this too much or else it loses its impact - paragraph break for emphasis is a very strong beat. More so than making something it’s own sentence.
Why: the more spacing on the page you have surrounding something important, the more power it has. That's why important bits of dialogue will be split off from the rest of what the character is saying via a dialogue/action tag [ex: "yes, yes, you're right." She stared at him with those void-black eyes. "But you'll be too dead for any of that to matter."] - by splitting that last line from the rest of the dialogue, it indicates that it's important. Splitting a line from the previous paragraph has a similar intensifying effect.
Double paragraph break for:
Rather than just going to the next line, press enter twice, so you end up with a white space between paragraphs.
Emphasis
Same as above, but use extremely sparingly. Otherwise you run the risk of it coming off as super cliche. Again, by adding the extra distance between whatever the important idea is and everything else, you emphasize its importance. If you emphasize too much, you're actually emphasizing nothing.
New POV
If you’re doing one of those things where you can have multiple POVs in a single chapter, make sure you add two paragraph breaks and also use the new character’s name in the first sentence to ground readers. Otherwise it’s hella confusing
Larger time skips
If it’s more than a few hours, add two lines because otherwise it reads at first like it’s one event flowing into the next directly
Exception: You’re summarizing time, and you’re like “this thing happened 12 hours ago. This other thing was 8 hours ago”