How should we incorporate our startup?

Moreover, establishing a relationship with an attorney is not something that you should seek to avoid. Initial startup assistance is usually not very complicated and it would be prudent to establish a relationship with an attorney now, get your venture off on the right foot, and not be forced to seeking inevitably more-expensive legal assistance down the road in the event of an oversight.

Yup... What Adam said.

Lots of attorneys have "start-up" packages that are affordable. For a couple of thousand dollars you can get the right corporate entity and capital structure that can help achieve your objectives. In this case, you get what you pay for.... don't be penny-wise and pound foolish. I'd be happy to recommend someone if you're really desperate.

Though you should assume a bunch of caveats to this general answer, the business entity of choice for most start-ups like yours in Texas is the basic Limited Liability Company. From your post, however, the most important part of your business start is to have a solid Operating Agreement, because you have a bunch of people who are unrelated and likely, eventually, to have disputes that will need to be resolved in a peaceful way. You MUST have an agreement about who owns what, how people leave, how people join, what happens when key people get hit by a bus, etc.

Not having this agreement is to ASK for a destructive lawsuit, and failure to have it tells a potential investor that you are not ready for prime time, and he can come in to tell you what to do on his terms.

These documents are easy to put together, but if you want them done right, you need someone with real experience and knows the pitfalls of doing it wrong.

There are LOTS of us out there, and you can use anyone in Texas for this kind of work. Stay in the state though, and don't anyone use a cookie-cutter document. This is not a place to skimp, but if I'm seeing the picture correctly, the whole package should be $2k or less (for the LLC filing and Operating Agreement).