question 1; BUSINESS ENTITY VERSUS SOLE PROPRIETOR

From a tax perspective, and disregarding other issues such as limited liability, does it always make sense to operate businesses in a separate business entity, such as a C corporation? When might it be better to be a sole proprietor?

question #2: Assume a taxpayer earns $150,000 of wages from his employer each year and he is considering starting a business on the side. He expects the business to operate at a substantial loss in the first couple of years. Focusing on tax analysis (and disregarding other considerations, such as limited liability), would you recommend he start the business as a C corporation or sole proprietorship? Why?