Preheat oven 400 degrees F. Sift together the flour, baking powder and salt onto a piece of waxed paper.
In a large bowl, using an electric mixer on medium speed, beat the butter and granulated sugar together until light and fluffy. Beat in the egg and vanilla, then add flour mixture in thirds, stirring each time until the dough is smooth.
On a lightly floured board, roll the dough out to a thickness of 1/8 inch. Using cookie cutters, cut desired shapes and transfer to an ungreased baking sheet. Gather up dough scrapes and roll out to use all the dough.
Bake until just lightly browned on the bottom and pale golden on the top - 6-8 minutes.
Let the cookies cool for a few minutes and then transfer to a wire rack.
Frosting: In a medium bowl combine confectioner's sugar and slowly add milk and stir until a stiff bu spreadable paste forms. Don't add too much milk or it will be overly runny. To color the frosting simply add a couple of drops of food coloring, stir. Use multiple bowls for multiple colors.
Here comes the fun, creative part! Frost cookies with a pastry brush or small metal spatula. Once the first coat of frosting is dry, you can get creative and pipe another color of frosting over the top to add details such as stripes, zig zags, or polka dots. Disposable plastic pastry bags work well and give you control when piping. Sprinkle the cookies with colorful of sugar or edible glitter.