In a large mixing bowl, beat the cream cheese and butter together with an electric mixer until well blended.

Add the sugar, egg, and vanilla extract; beat on medium speed for 1 minute.

In a separate bowl, whisk together the flour and baking powder.

Add half of the flour mixture to the wet ingredients and mix well. Then add the remaining flour and stir until fully incorporated.

Cover the bowl with plastic wrap and refrigerate the dough for 1 hour.

Preheat the oven to 350°F. Line two baking sheets with parchment paper or silicone baking mats.

Scoop the dough into 1 ½-inch balls. Roll each ball in sprinkles or sanding sugar and place on the prepared cookie sheets, at least 1 inch apart.

Flatten the cookies slightly with your fingers or the bottom of a cup.

Bake for 9–10 minutes, or until just set.

Let cool on the baking sheet for 2 minutes before transferring to a wire rack to cool completely.