Wow - talk about an optimistic approach to business. I have to say that IMO this is horrible advice. You need a lawyer for equity deals - you'll never convince me otherwise. Your "simple agreement" is fine - as long as it was written/reviewed by an atty w/ experience in this particular subject. Having a partner, dissolving a partnership, firing a partner - those are rarely simple "plug and play from a handbook" type of situations. You need a document that handles everything known to man. The more you spend up front on this one not-simple matter means you spend less down the road.
"If you can't afford to do it right, don't do it at all." You'll potentially save yourself a ton of money and stress if you follow that sentence. Don't start your business if you can't do the legal/tax stuff correctly. Don't go into a partnership if you can't do the legal/tax stuff correctly. Any other advice IMO is just overly optimistic. "But it'll never happen to me and my best mate, Jimmy - we'll be buddies for life!" Of course you will...
In my experience, elance is not the place for large jobs (and I've tried). I would strongly suggest people not start out w/ a large job on elance and instead start w/ smaller piecemeal-type work.
Since you mention discountasp.net I wanted to say that, for most people, discountasp.net is the most expensive shared hosting you can find. I've been very disappointed w/ the quality of service from every shared host I've used in the past two years - and by "service" I mean both the speed and the technical support. I'm exclusively an ASP.NET person so I don't have experiences w/ php hosts to compare against.
I've done some posting on elance before and I will suggest to start with the smallest job (i.e. cheapest) first to get used to working with bids and vendors. Start with a logo + business identity for $300-$500, go with only 5-star people with 6+ months of feedback. Once you have that, do a 3-5 page website for $300-$500. By now you should have a good feel for (1) the process, and (2) the people so now's the time to bump it up to a $1000 or $2000 project.
Those places really aren't the place for $2000+ projects IMO.
I just came across this and wanted to add my thoughts and reach out to the other Dallas startups.
1) Is Dallas a good city for startups? That depends on your involvement/wants/definition. There's a lot of money here and a lot of good MBA schools/programs around. If you had asked, Is Dallas a good city for hackers?, I would've probably said, "Not really since we don't have a quality tech school."
You have a decision to make: can you self-insure for the minor costs or not? By "self-insure", I mean can you handle up to $2500 or $5000 per year of health costs if you had to?
You can get $500 deductible insurance plan for $400-$600 or $5000 deductible plan for $180-$250.