Personal injury victims are entitled to various types of damages, one of them being compensation for lost income. This is awarded to victims who have had to take time off of work, switch jobs, or quit working altogether due to the severity of their injuries. Most personal injury victims can prove the amount of income lost by showing paystubs and submitting statements from their employers. But, what happens when a victim is self-employed? Here’s how to calculate and prove your lost income if you’re self-employed:
Understand the types of losses.
Before you begin, it’s important to understand exactly what lost income compensation should cover. In addition to your current income, your calculations should factor in lost business opportunities, contracts, and goodwill.
Begin to gather documentation that you will need to calculate the amount of income you have lost due to your injuries. You will need to find your tax returns—preferably from the last few years—to prove how much you made before the accident. If your injury only affected your ability to work for a month or so, then it may be helpful to gather all of your invoices from the last several months so you can determine how much your income dropped compared to previous months.
You will also have to calculate the value of lost business opportunities and contracts. Let’s say as a result of your injuries, a client had to hire someone else to finish a project that you were originally hired to complete. In this situation, reach out to the client and ask that they send a written statement to you that you can provide to the insurance company.
Calculate your losses.
To calculate the amount of income you have lost, you simply have to look at your monthly invoices or prior tax returns to see the difference in earnings. Then, add the value of any contracts that you have lost due to your injuries. Using the previous example, if the client that had to hire someone else was supposed to pay you $5,000 for your work, then add $5,000 to your total.
You may also be able to prove that this client would have hired you for additional projects in the future had he not hired someone else. For instance, if you have emails showing that the client was in talks with you about various other projects before hiring someone else, this could be considered a lost business opportunity. Calculate how much you would have charged the client for these services and add that to your total as well.
Finally, you will need to calculate the goodwill that you have lost due to your injuries. Calculating something non-tangible such as goodwill can be challenging, but an attorney can help you determine whether you should include this loss in your claim.
It’s hard to calculate the value of your claim—especially if you are self-employed. But, the attorneys at Reisch Law Firm can help to ensure that you are accounting for every loss that you have suffered as a result of your injuries. Schedule a free consultation today by calling 303-291-0555 or filling out this online form.