Preheat oven to 350ºF.
Mix dough: In a medium mixing bowl stir together butter or ghee, sugar, egg, baking powder, vanilla extract and sea salt. Add coconut flour and mix until combined. Allow the dough to rest for 5 minutes at room temperature.
Knead: After 5 minutes, sprinkle 1 Tablespoon of arrowroot powder over dough and knead, using your hands until firm. If it is sticky or too wet, add another Tablespoon of arrowroot.
Roll out dough: Dust a clean rolling surface (or a parchment lined surface) with arrowroot and roll out dough, using a rolling pin, until it's about 1/4-1/3″ thick.
Cut dough: Use cookie cutters to cut dough into desired shapes and place on cookie sheet.
Bake: Bake for 8-10 minutes or until the bottom of the cookies are golden. Let cool for a few minutes on the sheet before carefully transferring to a wire rack to cool completely.
Decorate: Once cookies are cool you can frost and decorate them. To make homemade icing, combine powdered sugar, vanilla and almond milk (start with 1 teaspoon) in a small bowl. Whisk until all lumps of sugar have dissolved and icing is the thickness you desire. You don't want it to be super thick, but also don't want it to be too runny where it melts off the cookies. Frost cookies with icing and add sprinkles right away, before the icing has a chance to set.
Store: Cookies will keep in an airtight container at room temperature for 3 days or in the fridge for up to a week.