Do I need to treat them like a w2 employee or can this by done on an informal basis?

I think that any company that employs more than 1,000 or which currently has a payroll where the average employee makes 1.5x the qualifying income for a SFH in the Seattle Area should face tax implications.  

Better to outsource those functions until your consultant fees exceed the cost of salaries for equally qualified employees (a pretty high bar).You have a great roadmap, just be open to tweaking it as you learn what works and what doesn't.  

In an index fund, you're many, many levels away from actively managing those businesses, thus your returns are eaten up by employees you must pay to manage the business, boards of directors, executives, then of course, your brokerage who packages all of those companies together to make your index fund.  

The smallest independent mortgage brokerage I've encountered with competitive interest rate pricing had 14 employees. 

W-2 employee?

We're growing fast, we are at 4 employee's now, and have job openings for 2 more. 

Adding to that, oil companies are still laying off their workers quarterly and the benefits for ex-employees who were laid off are coming to an end soon or have already ended.

Per July's Housing stats from HAR, we now have 4 month's inventory (http://www.har.com/content/newsroom).

If you are self employed and have no other employees, you might want to ask your CPA about a company sponsored retirement plan as well.