Preheat oven to 350 degrees F. Line 12 muffin cups. In a large bowl, cream together the butter and sugar until light and fluffy. Add the eggs and vanilla; whisk to combine. Stir in the salt, baking powder and flour. Add the shredded coconut. Stir in the milk.
Divide the batter among the muffin cups. Bake for 20-25 minutes or until a toothpick inserted into the cupcakes comes out clean.
Vanilla Coconut Frosting:
In medium bowl, beat together the butter, vanilla and sugar until blended. Gradually beat in the milk until smooth. Frost cupcakes and sprinkle with the shredded coconut.