Down cut router bits usually produce less chip-out. With that small router, 1/4" bits will likely be the largest that you can run, because larger cutters in a 1/4" router tend to flex the shanks excessively when you try to cut with them, producing variation in the widths of the cuts. Since the rotation of router bits causes them to cut in both directions at the same time, a sacrificial piece of wood clamped to both sides of your work will help reduce chip-out (works like a zero clearance insert in a table saw). You can buy bit extensions, but using one in such a small router will likely destroy the bearings in the router fairly quickly, since the leverage of the longer bit will be greater.
I make a lot of boxes using box joints, but learned many years ago that my table saw and a box joint blade set, like the Freud SBOX8 or at least a blade that has a FTG (Flat Tooth Grind), will produce the best flat bottomed box joint cuts with little to no chip-out and superior to those made by a router. Since a saw blade only cuts in one direction, a sacrificial piece is only needed on the blade exit side of the work as well. I now also have an Incra I-Box jig that makes it very easy to set up and cut box joints in any width from 1/8" to 1". It has a sacrificial strip included in it's design, and you can change the position of this strip for each new joint set-up, so it can be used many times before it needs replacing. The I-Box jig will work on a router table as well as a table saw, if the router table has a miter slot, but your work will need an added sacrificial strip behind it to prevent chipping of the back side of the work, and this sacrificial strip will require replacement in order to work well for each new piece of work that is cut.
There are box joint router bits that are a stack of slot cutters. With these, you will be limited in box height to the height of the cutters, or you will need to do some tricky set-ups in order to be able to cut half of the joint and then flip the work over to cut the other half of the joint and get both cuts to join in the middle correctly. It can be done, but I prefer making one cut at a time and incrementing the work each time to make the next cut. Doing it this way lets you make a box of any height without the complicated set-ups that would be required for a joint only 2X the height of one of those bits.
Charley