1. In a medium bowl, whisk together the flour, baking powder, baking soda, and salt. Set aside.

2. In a large mixing bowl, use an electric hand mixer or stand mixer to cream the butter and granulated sugar together until the mixture is light and fluffy, about 2-3 minutes.

3. Mix in the egg, sour cream, and vanilla extract until the batter is smooth and well combined. Scrape down the sides of the bowl as needed.

4. Gradually add the dry ingredients to the wet ingredients, stirring just until combined. Be careful not to over mix, as this can make the cookies less tender and chewy.

5. Divide the dough into two portions, shape each into a disc, and wrap tightly in plastic wrap. Chill in the refrigerator for at least 1 hour, or overnight for best results. This is crucial for easy handling and preventing spread.

6. When ready to bake, preheat the oven to 375°F (190°C). Line a cookie sheet with parchment paper or a silicone baking mat.

7. On a lightly floured surface, use a rolling pin to roll out one chilled dough disc to about ¼-inch thickness. Cut into desired shapes with cookie cutters and carefully transfer them to the prepared baking sheet, leaving about 1 inch between cookies.

8. Bake for 8-12 minutes, or just until the edges are lightly golden and the centers are set. Baking time may vary depending on cookie size and oven. Do not overbake.

9. Let the cookies cool on the baking sheets for 2 minutes before transferring them to a wire rack to cool completely. Repeat with the remaining dough.

10. For the Frosting: In a large bowl, beat the softened butter until creamy and smooth, about 1-2 minutes with an electric mixer.

11. Gradually mix in the powdered sugar, adding 1 cup at a time until fully incorporated. Beat until light and fluffy.

12. Add the vanilla extract and 1–2 tablespoons of milk, stirring until the frosting reaches a smooth, spreadable consistency. Add more milk, ½ teaspoon at a time, if a thinner consistency is desired. If too thin, add more powdered sugar.

13. If desired, divide the frosting into portions and add food coloring to create different colors. Mix well until the color is evenly distributed.

14. Spread or pipe the frosting onto the tops of the completely cooled cookies. This step is best done when cookies are completely cool to prevent melting.

15. Add your favorite sprinkles or other decorations as desired. Allow the frosting to set for at least 15-30 minutes before stacking or storing the cookies.