Here are the steps I take for small lettering:
1) Sand the surface smooth and seal with shellac (helps prevent tear out)
2) Take shallow cuts with very sharp 45 deg V-bit run slowly at high revs
3) Seal newly exposed end grain with shellac (prevents capillary action)
4) Apply acrylic paint liberally. Let dry completely.
5) Sand off excess paint.
6) Fill any unpainted V-grooves with extra-fine paint pen
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