Unless your yarn strands are in the right place to start the neck, cut the ones that are attached to the poncho pieces and start fresh when you work the neck. You can weave in the ends of the cut yarns.
If they specify circs for the neck, and you have the right size to fit around the neck--do it in the round. If you don't have the correct size, then you can do it flat.
The problem is that on circs, you are always working on the right side, so if the directions are for circs and you want to knit flat, you'll have to reverse the directions for the WS rows.