standalone arduino board

I am looking to build a standalone arduino board, meaning I prototype something on the arduino, program it, then take the chip and place it on a seperate board and use it that way. Mainly it will be used with LEDs, so nothing too extreme. I found this on instructables: http://www.instructables.com/id/Standalone-Arduino-ATMega-chip-on-breadboard/

Would that be the way to go? I realize that isn't the best place to get ideas. If not, can anybody point me in the right direction, like what parts I will need, or a diagram. I will need a few of these boards, but don't want to buy a new arduino board everytime. Not exactly sure what to call this, but hopefully someone will understand what I mean. Thank you.

That one shows a 168 chip. Will a 328 chip work on that as is, or do I need to change anything?

328 is just a 168 with 2x the memory.

So this would be good to use as a basis to draw up a schematic and get some boards made which will permanently hold the chip I program along with the other parts (LEDs, pot, etc.)? I plan on using a 12 volt battery. That 7805 regulator going to be ok with it?

Can I eliminate some parts? I see some that I won't need. Could someone let me know if by eliminating these parts this would still work?

In the pic "LED", can I eliminate the LED, resistor, and black wire to ground? Don't need that LED.

In the pic "Add a reset switch" can I eliminate the tact switch, black wire going to ground, & black wire going from the switch to pin #1? What about the resistor, does that need to stay? Don't need the reset switch.

In the pic "LED on Arduino Pin 13", can I eliminate the green LED, resistor, and red wire? Don't need this LED either.

Thank you.

Here’s all you need.

Power however you want.
7805 can run pretty warm if you are drawing a lot of current. Give yourself room to add a heatsink, or use a TO-220 type package that you can slip a heatsink onto.

You can get the crystal, caps, resister,7805, socket, all at dip micro quite inexpensively. LEDs too, don't forget current limit resisters for them.