Willie,

You will need what is called a rabbeting bit for a router to simplify things. It also is easier if you have a router table but it can be done without one if you have a steady hand. The rabbeting bits usually come with a bearing that rides along your straight piece of your framing material and gives you your lip(a 1/4" rabbeting bit will give you a 1/4" 'lip)

You would normally rabbet the edges of your material before you cut the pieces for your frame so you don't get rounded corners.

There is a tutorial on making frames by Kein Daly that may help here.

 

Tom

 

Willie, you can also do it with a table saw. Just set your blade depth at 3/8" and make several passes until you have cut out 1/4" width. I do it all the time. I then clean it up with sandpaper wrapped around a small block of wood.  Mick.