In the bowl of your stand mixer, beat your softened butter until fluffy. Add sugar, baking powder, and salt, scraping the sides of the bowl repeatedly. Then add the wet ingredients (egg, milk, and vanilla) and mix well. With the mixer on the lowest speed, slowly add the flour and mix until all ingredients are well incorporated.
Separate dough into two and wrap with plastic wrap. Refrigerate for at least 30 minutes.
Preheat oven to 375 degrees and line two baking sheets with parchment paper.
Remove one chunk of dough from the fridge and massage it lightly with hands. Roll out dough on a lightly floured surface to 1/8 inch and cut out with cookie cutters. Place on baking sheets and bake for 7 to 9 minutes, or until edges are lightly browned.
In the bowl of your stand mixer, beat butter. Add sugar, vanilla, and milk and mix well. Add food colouring and mix again. Using a piping bag or a spoon, decorate cooled cookies as desired. Sprinkle with sugar crystals or sprinkles.