In a small bowl combine the water, yeast and sugar. Whisk it all together a bit and let it sit for about 5 to 10 minutes until the yeast dissolves and starts to froth up.
Once the yeast has dissolved, add the egg, milk and whisk.
To the bowl of your mixer combine the flour and salt. Add the yeast mixture and butter to the bowl. Using the dough hook, mix it well until well incorporated. You will know that the dough is done when it comes clean from the sides of the bowl.
Remove the dough from the mixer and place it in an oiled bowl. Cover it with a clean damp towel or plastic wrap and let it sit and double in size, anywhere from 1 to 2 hours, in a warm place.
Roll out the dough in a long rectangle that's about 3/4 of an inch in thickness. Cut the dough in long strips then cut the strips to form squares.
Add about 3 inches of oil to a deep frying pan, I used a Dutch Oven. Before frying the beignets make sure the oil is hot, it needs to be 350 F degrees. Fry the beignets, about 5 or 6 at a time until golden brown on both sides. Make sure you turn them on both sides to fry them evenly.
Transfer the beignets to a large bowl lined with paper towels to drain some of the excess oil. Sprinkle beignets with powdered sugar and serve.
Always check the expiration date on your yeast and make sure it hasn't expired. All your yeast products whether it’s in a jar or a package should be stamped with a “Best if Used by” date. Always make sure you check this date, even when you purchase the yeast, who knows it could have been on the shelf past its expiry date.To keep your yeast fresh and longer lasting, unopened yeast packages or jars should be stored in a cool or dry place such as your cupboard. However, you can also store your yeast in the fridge or freezer. If you do store it in the freezer and need to use yeast for your baking, make sure you take out the amount you need and let it sit at room temperature for at least half hour before using.Once your yeast package or jar has been opened, you must refrigerate the yeast or freeze it in an airtight container.One thing to remember about your yeast, is that it is a living organism and over time it will lose activity, even if you’ve never opened the jar or package. So if you don’t bake often, buy the smaller yeast packages rather than a big jar of yeast.Make sure your water is not too hot or it could kill the yeast which will cause your dough not to rise at all. The ideal temperature for the water should be between 105 F degrees and 110 F for proofing. While 95 F degrees is the best temperature for yeast to multiply, that's not warm enough for proofing active dry yeast. Please keep in mind that nutritional information is a rough estimate and can vary greatly based on products used. If after dissolving the yeast in the lukewarm water with the sugar, the yeast didn't start to froth up, do not continue with the donuts, your dough will not rise. You could also use instant or rapid-rise yeast instead of the active dry yeast. If you do, you do not need to dissolve the yeast in the lukewarm water. It could be mixed right into the dough.TIP: To speed up the dough rising process, heat your oven to 200 F degrees. Turn off the oven and place your dough as specified in step 4 in the oven with the door closed. This will ensure a warm environment for your dough and the dough will rise fairly quickly, assuming the yeast was good.