Unlike an employer-employee situation where the calculation of lost income is much more straightforward, losing self-employed income is much more difficult to calculate in determining your losses for your medical malpractice case. As a self-employed businessperson, you could be entitled to lost income, loss of earning capacity, lost profits, lost business opportunities, and the loss of good will and/or the diminution in value to your company. It is your responsibility to lessen or mitigate your damages, to the extent possible.
Again, it is very important to be as detailed as possible in keeping accurate records. Make sure your doctor understands your physical limitations and how it affects your job so that your doctor can place this information in your medical record to help support your lost income claim.
You will be asked to provide tax returns for approximately the last three to five years. Unfortunately for many, this income history does not adequately explain your current situation or what your future may be. You will also want to prepare a year-to-date financial statement that indicates your current financial position. You will need to present as much evidence and proof as possible to establish the losses you are claiming.
It is a good idea to make copies of your calendar of appointments and get letters from current or prospective clients or customers to provide a better picture of lost income or loss of future business or opportunities.
Another difficulty for a self-employed businessperson is that you are generally doing your job and marketing for future work at the same time. For more complicated cases, it might be prudent for us to hire a forensic accountant or an economist to help clarify your lost income situation.
Many times, claims of loss of income by self-employed businesspeople are speculative and difficult to prove. Because you know your business better than anyone else, including your attorney, it is necessary for you to provide the best possible documentation to help prove your claim. Your attorney may want to hire an economist or vocational expert to help determine your losses.
If you are a commissioned salesperson and are out of work due to injuries sustained in an accident, it may be very difficult to prove what income you lost as a result of not being able to work. It would be difficult to prove what new orders you might have received, how many new clients or customers you would have gotten, and how much additional income you would have had.
You should make a copy of your day planner to show what accounts you were working on or were scheduled to begin working on. You should get a copy of your year-to-date commissions and make a list of all prospects that you have “in the pipeline.” You should get letters from your employer and make a list of your current accounts and any future accounts that you may be working on. You could also get letters from your coworkers or other salespeople who can help verify what you were doing in the way of business.
Perhaps the best type of documentation and/or proof to help establish your loss of income claim would be a detailed letter on your accountant's letterhead that explains in detail your business, any seasonal changes you experience in your income, why your business and income were on the rise, forecasting what your income would have been and explaining in great detail the reasons behind that calculation, and any other information that is relevant to explaining any loss of income or business which you incurred or can expect to incur.
Proving Your Case
As the injured party, it is up to you and your injury attorney to prove your case to either the finder of fact, which can be an adjustor, arbitrator, judge, or jury, by a preponderance of the evidence. In loss of income cases, it is very important to present as much “proof” as possible to support your claim. Many times this can be done with letters from employees, coworkers, family members, and friends who can explain why you are not able to work or cannot earn what you were once making. At other times, pay stubs, tax returns, expert reports (economists or accountants), and letters from current or potential customers or clients will help to make your case. You should remember that insurance companies rarely rely on oral representations of facts, so don't think it will be enough for you to just say you could not work. You must have written materials to corroborate your representations.
Put yourself in the mind of the insurance adjuster, arbitrator, judge, or a member of the jury. What proof would be necessary to help you decide what would be the greatest amount of money to award for past loss of income, future loss of income, or diminution in one's business? While there is no hard-and-fast rule as to what to present, you should be as comprehensive and creative as possible. You should discuss all aspects of your business with us so that a comprehensive loss of income claim for your personal injury or medical malpractice case can be developed and presented.
If you or someone you love is a self employed person trying with a personal injury case, it is very important to have the help of a Personal Injury Attorney, to make sure your rights are fully protected. Call our experienced team at 888-244-5480 today for a free consultation.
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