Steve, there are a lot of different methods used for finishing your signs. Everybody has a method that works for them.
I like to use acrylic paints for my interior signs. You have a rainbow of colors to choose from. I route the letters/image first. Finish sand the entire sign. I usually hand paint the letters with the acrylic paint, a little paint outside the letters is no problem. When the painting is complete, I use my random orbital w/220 grit paper. A light sanding to remove the excess paint. Seal using poly or a finish of your choice.
The first pic is after painting, ready to sand.
Second pic, finished.
BTW, these were done on my CNC
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