Line 2 baking sheets with parchment paper or a silicone mat. Set aside while you make the cookies.
Using a hand mixer, mix the butter and confectioner's sugar until the mixture is fluffy (3-5 minutes). Then beat in the cream cheese and egg. Pour in vanilla and mix.
Then add flour and salt and thoroughly mix on low speed until flour has been fully incorporated.
Add milk, one tablespoon at a time, until the mixture comes together.
Divide the dough in half, flatten each half into a disc, and place it in the fridge for 20 minutes or more so it firms up.
Preheat oven to 350°F (178℃).
Lightly flour a cutting board or smooth surface and roll out the dough, one half at a time, to about ¼-½ inch thick. Cut with a 3-inch cookie cutter or use the desired size of cookie cutter. For rectangular butter cookies, cut with a knife or a rectangular cutter. Use a fork to prick holes.
If piping the cookies, add enough milk or cream so it is manageable when piping. Proceed immediately with piping.
Transfer them to the baking sheet pan, leaving them about 1 inch apart. Bake for 10-12 minutes or until edges are very lightly browned (everyone's oven is different, so please start checking at around 5 minutes). (It all depends on the thickness of the dough. Do not let it brown.) Let the cookies cool completely before serving.
Once cooled, proceed with decorating the butter cookies by dipping them in sugar or chocolate icing and sprinkles.