If you want to build a basic home theater for $500 and can wait to add atmos later I would probably go this route:
Denon AVR-S720w ($249)
While speakers are the most important part of any system, you just need something that will work well until you can upgrade. Start with a basic 5.1 setup, them use these speakers as your heights when you upgrade your speakers. On your budget I would suggest:
Dayton Audio B652-AIR 5.1 Home Theater Surround Sound Speaker System with 10" Subwoofer ($215.80)
You could also spend less and get the:
B652 5.1 Home Theater Surround Sound Speaker System with 10" Subwoofer ($199.80)
You can also get your speakers from Monoprice. Both of their budget systems have received good review from CNET.
The basic Monoprice 5.1 system is $89.00
The premium version of the basic Monoprice 5.1 system is $179.99 but you can currently get it for $150.
Looking at the dimensions of your room I am not sure that Atmos would be a good fit. You would need to research that. instead, you could get a very good 5.1 receiver for under $200 from Accessoriesforless if you want to keep the surround sound option open or you could get a good 2 channel receiver for even less. With either of these options you could put more money into the speakers and start with a 2.0 bookshelf setup, and then add a sub later if you feel you still need one.
There are a lot of very good bookshelf speakers in the $200-$300 range if you want to start with a very good 2.0 setup,and you would only need to add speakers, not upgrade them as you expand to 5.1. these are the ones I am considering and there are many more if you look in the speaker forums. However my focus is movies and music, so others may have different opinions if gaming is a priority.
Philharmonic Audio AA monitors $210/pair
Emotiva Airmotiv B1 $299/pair
PSB Alpha B1 $299/pair
Elac Debut B6 $280/pair
All of these brands offer center channels if you later want to expand to 5.1.
If you want to add a sub, check out the Emotiva BasX S8 ($199).