Preheat oven to 350F and line a baking sheet with parchment paper.
Beat butter and sugar together until light and fluffy. Add vanilla extract and beat for an extra minute. Gradually stir in flour until dough forms.
Divide the dough in half and wrap each dough ball separately in cling wrap. Refrigerate for at least 1 hour.
Once dough is chilled, remove one dough ball from refrigerator. Keep the other dough ball chilled until ready for immediate use. If dough is crumbly, add 1/8 tsp water at a time to reform dough. Lightly flour a clean surface and rolling pin. Roll dough out 1/8'" thickness and use cookie cutters to shape cookies. Dip cookies in sprinkles, ensuring tops are fully covered.
Place cookies on a baking sheet lined with parchment paper and bake for 10-12 minutes or until the edges are barely golden. Allow cookies to cool on a rack or plate.