Calculating Lost Wages When You are Self-Employed
Michael Babboni
Personal Injury
When you are self-employed and involved in a car accident that resulted in debilitating injuries, you may find it difficult to calculate and prove your wages. After becoming injured in an accident, you may be entitled to compensation for lost wages as well as any lost business opportunities if it can be proven that the other driver is responsible for the accident.Proving Lost Wages When Self-Employed
Since it is much harder to prove lost wages when you are self-employed, you should always retain accurate and detailed records, so you can provide adequate proof of income when needed.
You will first want to show how much you would have been able to earn from the date the accident occurred to the time you fully recovered. 1099 forms or a tax return from the previous year is good evidence along with any business invoices you have and business receipts.
Next, you will also want to gather all medical documentation discussing your injuries and recovery. A doctor's note and any other medical proof of your condition can be used to show why and when you were unable to work.
The following are a few more specific forms of documentation you can use to prove previous income when self-employed:
- Tax Returns: as previously mentioned, tax returns are good documentation to provide when calculating lost wages. It is a fair representation of your income from the previous year.
- 1099s: another previously mentioned document is your 1099. The information on this document is reported to the government and is also considered a reliable representation of your income.
- Financial Statements: if you have balance sheets showing any profits or losses you experienced the previous year, or you have a list of expenses, you can use these documents to show how much profit you would see on a regular basis.
Having these documents available can help prove lost income, your lost earning capacity, lost profits and opportunities, and even the loss of goodwill.
Difference Between Being Self-Employed and Being an Employee
It is much easier and more straightforward to prove lost wages for an employee versus someone who is self-employed. If you are a freelancer or work independently or as a sole proprietor, then you are considered self-employed.
Employees will have access to previous pay stubs and most often experience a more stable stream of income that is easier to calculate for lost wages.
Still Unclear?
If you are still unclear of the documentation you need, or you are a new small business, and you don't have a full year of income you can use to show earning potential you may miss out on, then you may want to seek the counsel of an experienced personal injury attorney.
A personal injury attorney can help you gather all the documents you need and will help guide you through the claims process from start to finish.