Prepare Royal Icing for decorating. Cream butter, sugar and vanilla in a mixer. Mix until well combined and fluffy. Add vanilla and egg, mix until well incorporated. Combine flour, baking powder and salt and mix. Add this mixture to the creamed butter in intervals. Mix until well combined. Remove dough and shape into a disc. Cover tightly with plastic wrap and refrigerate for 45 minutes to one hour or until firm.

Preheat oven to 375 degrees F. Remove cookie dough from refrigeration. Roll out dough to ¼ inch thick on a well-floured surface or between two sheets of parchment paper. Cut out cookies using holiday cookie cutters. Combine scrap dough, roll out and cut into cookies. Carefully transfer cut-out cookies to a parchment lined baking sheet. Place in oven and bake for 7 - 8 minutes at 375 degrees F. Remove baked cookies and allow to cool for 1 -2 minutes. Transfer cookies to a rack to cool. When cookies are cooled, decorate with Royal Icing and candy sprinkles.