How to Document and Claim Lost Self-Employed Income After an Accident in North Carolina

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How to Document and Claim Lost Self-Employed Income After an Accident in North Carolina

Detailed Answer

If another person’s negligence sidelines your business, North Carolina law allows you to recover lost income and lost earning capacity as part of your personal-injury damages. (See N.C. Gen. Stat. § 1-539.21.) For people who receive W-2 wages, proving those numbers is straightforward. When you are self-employed—sole proprietor, LLC member, or independent contractor—you must build a paper trail that convinces the insurance adjuster (or jury) of three things:

  1. The accident caused you to miss work. Secure a treating-doctor letter that states your injury, treatment plan, and the exact dates you were medically unable to perform your ordinary work duties. Ask the doctor to connect the disability to the crash event.
  2. You had a proven earning history. North Carolina courts accept business records created in the regular course of operations. Gather:
    • Two to three years of federal/state tax returns (Schedule C, Schedule K-1, or Form 1099).
    • Quarterly profit-and-loss (P&L) statements, bookkeeping ledgers, or accounting-software exports.
    • Client invoices, signed contracts, and bank statements highlighting deposits.
  3. You actually lost income—and did not simply defer it. Compare the period you were disabled with the same period in prior years. Document cancelled contracts, substitute-worker payments, or late-delivery penalties. If your revenue is seasonal, include industry data or sworn CPA testimony to explain fluctuations.

Step-by-Step Filing Process

  1. Notify the at-fault party’s insurer that you will be making a lost-income claim and request a wage-verification form or create your own spreadsheet.
  2. Assemble your evidence packet:
    • Doctor’s disability note with CPT/ICD codes.
    • Prior tax returns and P&Ls.
    • Current-year P&L showing the dip in revenue.
    • Affidavit from you (and, if possible, your CPA) authenticating the records under Rule 803(6) NC Rules of Evidence.
  3. Calculate lost income: Use the average monthly net profit for the same months in the previous 1–3 years, adjust for proven growth trends, then subtract the actual net for the disability months.
  4. Add replacement-labor costs you paid to keep the business afloat; North Carolina treats these as part of your economic damages.
  5. Present the documentation in your demand letter. If negotiations stall, your attorney files a complaint in the county where the crash occurred or where the defendant resides. Your sworn records become exhibits, and expert testimony from a forensic accountant may bolster the numbers.

What About Future Lost Earning Capacity?

If the injury produces long-term limitations, you may seek future losses under § 1-539.21. Vocational-rehabilitation experts and economists project your post-injury earnings versus your pre-injury trajectory, discounting to present value.

Helpful Hints

  • Keep contemporaneous notes. Daily journals describing pain levels and missed client opportunities add credibility.
  • Avoid cash-only records. Deposit all revenue and pay expenses from a business account so every dollar shows up on statements.
  • Don’t exaggerate. Adjusters cross-check tax records with the IRS. Inflated numbers damage your entire case.
  • Update medical treatment. Gaps in care allow insurers to argue you were fit to work.
  • File taxes on time. Late returns weaken the reliability of your claimed income.

Injured and worried about business income? North Carolina law lets you recover every dollar you reasonably lost, but only if you prove it. Our personal-injury attorneys have years of experience assembling winning lost-income claims. Call 919-313-2737 today for a free consultation and let us protect both your health and your livelihood.

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