Use one of these instead of what your trying to use.
http://www.strongtie.com/products/co.../ot-ol_apg.asp
No over hang I feel is a really bad idea.
It will shorten the life of the siding,
I sure hope you sealed under those bottom plates, there's going to be two issues your going to be dealing with by building that shed on a slab like that, one is water getting in under the bottom plates, and the sheathing or siding rotting out at the bottom of the wall.
Sheathing, or T-111 if that's what the plan is for siding needed to be 6" from grade.
One way around it is to use 1 X 6 vinyl lumber around the base of the wall, Z molding then the siding.