calculating lost income for self employed

Calculating Lost Income For Self-Employed Individuals After a Car Accident

Losing your job or missing out on work and income because of the injuries you suffered in a car accident can create financial hardships. The losses can be even more severe for self-employed individuals. On top of it, it’s hard to precisely compute the loss of future income in the case of the self-employed.

To determine the appropriate financial compensation, the injured victim in this case must account for the loss of existing customers, missed business opportunities, cancellation of contracts, lost goodwill, and other economic costs. You should get legal representation from an experienced car accident attorney if your injuries occurred because of the negligence of another.

Factors Used in Determining Lost Income for Self-Employed Individuals

The evidence needed for proving lost income will differ based on the circumstances of your self-employment. For instance, a freelancer that gets regular work from a handful of clients can always ask for a letter indicating the amount of work and income lost while they were recovering from their injuries.

Tax returns can also be used for showing normal income if it doesn’t vary significantly between years. You may provide documentation such as an offer letter or similar correspondence if you had to turn down a large business opportunity or project because of the injury.

You can gather business records from the previous year if you are a hairstylist or in a similar profession, to demonstrate income.

Proving Lost Wages Following an Alabama Car Accident

Self-employed people that get hurt in a vehicle accident face multiple difficulties in proving lost wages following an accident. These are a few documents that can be used depending on the circumstances for proving lost wages:

  • 1099 tax forms from clients
  • Tax returns from previous years
  • Past, current, or outstanding business invoices
  • Bank statements
  • Deposited checks
  • Online transaction history
  • Client contracts stipulating payment
  • Sworn testimony or statements from clients

The documentation needs to show the amount you would have made if you were not injured. The document can establish a trend of income from recent and historical profits. It can be used for showing the amount you would have made in the future in the form of lost earning capacity.

Experienced attorneys use a mixture of documents for proving the lost wages of a self-employed victim. Victims that keep meticulous records usually have better success as compared to those that don’t. Victims with well-documented income from independent work present strong cases for compensation without having to ask for client testimony which can be difficult to ask for.

It’s vital to have a strong income record to prove a lost wages claim. In general, the burden of proving these lost wages lies with the victim. The burden of proving lost income and economic losses with reasonable certainty is harder for sole proprietors and small business owners as compared to traditional workers.

Traditional workers generally have a yearly or hourly salary with a set work schedule. This pays for their pay stubs and allows them to show their lost income.

Experienced car accident attorneys can help self-employed workers and freelancers prove their lost wages. They can also assist with recovering lost self-employment income by obtaining expert testimony from economists that explains the income the worker would have made.

Documenting Economic Losses Following a Car Accident 

It is vital to show proof in the form of documentation in a personal injury claim. Your attorney will help you negotiate with the insurance company. They may ask for the following:

  • Profit and loss statements
  • Tax returns
  • Receipts for overhead costs that were paid when you were injured
  • Proof of lost customers or projects because of being unable to work

An economic loss expert is usually hired in such cases to quantitate the economic losses a self-employed victim experiences depending on the type of business they are in. You should consider speaking with a car accident attorney to assess the extent of your lost income. They will be able to help identify the various aspects of the income lost.

Types of Income Loss for Self-Employed Individuals in a Personal Injury Case

Lost income is not necessarily restricted to wages in a personal injury lawsuit. Unfortunately, wages are generally the only type of financial benefit that is shown by a self-employed individual. They can show additional types of income for recovering compensation.

Additional forms of income for self-employed individuals include the following:

  • Lost business opportunity
  • Lost client goodwill

Calculating the amount for these additional forms of lost income can be difficult since they are highly speculative in nature. Car accident attorneys from a well-established law firm can usually prove these with a reasonable degree of certainty.

They have various types of experts on their panel, including economists to determine a fair and reasonable compensation figure. These testimonials can prove to be invaluable when negotiating with the insurance company.

Reputable Car Accident Attorneys in Alabama can Help You Obtain Your Rightful Damages

If you suffered injuries in a car accident due to another’s fault and you were self-employed, it is best to consult with a skilled car accident attorney who will act as your advocate. The Smith Law Firm can help you every step of the way until you receive the maximum financial compensation you deserve.

We are happy to provide you with a free initial case evaluation. Call us at 334-377-1674 or contact us online to make an appointment.