I just order this young Cedar of Lebanon in the mail (see attachment). In terms of potting, I am hoping to get some help. Should I just drop it in a larger clay pot and let it grow for a year (with some loam, peat, and sand), or prune the roots and move it to a bonsai pot sooner? I know transfer in the mail is stressful and I do not want to kill the tree. I was expecting it to be larger, so I am now questioning my initial plans. Any advice would help! Thank you very much!

It is years too soon for a bonsai pot: this young plant needs growth first. Just let it be , and repot in a bigger container ( or in your garden, even better) at the appropriate time.