Hey Brandon thanks for responding. 

Shouldn't I still be able to do a router on a stick approach with the SG200 even if it didn't have layer 3 capabilities? I figured I was able to do this because the switch ports do have trunking available. 

Yes, you can still do router on a stick, but that means you do L3 routing on the router not the switch.  

Since the 200 is only L2 you cannot assign IP addresses to VLANs except the management VLAN.

For router on a stick you make a trunk port on the switch and tag some VLANs then on the router make a trunk port to match.  On the router since it is a L3 device you can assign IP addresses to the VLANS/subinterfaces and use those addresses as the default gateway sfor the devices in the VLANs.  Then the devices can route to each other.

With a L3 switch it basically just becomes a router with a lot of ports and you can assign IP addresses to VLANs and not need a router or external L3 device to route between VLANs.

Make sense?

But without assigning Vlans ip addresses how can they talk to each other over the router?

For example I created Vlan 2 and Vlan 3. I want a computer from Vlan 2 wants to ping a computer on Vlan 3. In order for this to happen don't I still need to setup ip addresses on both Vlans? 

In the past I used a 2960 switch and even though it didn't have layer 3 capabilities it would still allow me to assign ip addresses on the vlans then allow me to subinterface the router. I would assume the same for the SG200. 

EDIT:

Apparently a cisco 2960 does have layer three capabilities. Which was probably why I was confused. 

Maybe this helps? https://supportforums.cisco.com/discussion/11579836/router-stick-vlan-possible-srp547w-sg200-26

For router on a stick the switch should be in L2 and does not need any IP addresses assigned to anything.  The ip addresses are only assigned in the router/L3 device.

What router are you using?  Maybe I can help with a sample config.