Formal vs. Informal
In an informal outline, you simply try to break your notes down roughly into sections which, even early on, clearly correspond to different parts of your document--for instance, sections which correspond to different supporting reasons. Just skipping some lines or starting a new paragraph is enough of a signal that you're beginning a new section. If your thoughts are clear enough so that you can label each section, so much the better.
Formal outlines follow a prescribed format but accomplishes the same purpose: organizing thought and the support needed to develop the ideas fully.
FORMAL OUTLINE
Thesis statement (main idea)
First main topic
First subordinate idea
First supporting idea
Second supporting idea
Third supporting idea
Second subordinate idea
First supporting idea
Second supporting idea
Third supporting idea
Second main topic
First subordinate idea
First supporting idea
Second supporting idea
Second subordinate idea
First supporting idea
Second supporting idea
First supporting detail
Second supporting detail
Each level contains at least two parts, so there is no A without a B, no 1 without a 2; however, each level may be divided without concern for the other level.
Source: www.svcc.edu/students/LAC/forms/Formal%20Outline.rtf
"How to Make a Formal Outline in Microsoft Word"
www.huffenglish.com/handouts/formaloutline.rtf
The document provides instructions for dealing with formatting issues in MS