How can I prove lost wages as a self-employed individual after an accident?: Practical steps under North Carolina law
How can I prove lost wages as a self-employed individual after an accident? — North Carolina
Short Answer
In North Carolina, you can recover lost income if you show, with reasonable certainty, that the accident caused you to miss work and lose earnings. For the self-employed, that usually means proving lost net income (profits), not just lost gross receipts. Use tax returns, profit-and-loss statements, invoices, bank deposits, calendars, and a doctor’s note tying your inability to work to the accident. A clear, well-documented calculation of before-and-after income strengthens your claim.
How North Carolina Law Applies
North Carolina allows injury victims to recover lost earnings and, when appropriate, loss of earning capacity. If you are self-employed, the focus is on what you actually lost—your net income or profits—caused by the accident. The law does not compensate you for gross revenue that would have been offset by normal business expenses. Your goal is to show a reliable before-and-after picture: what you typically earned, what you actually earned after the crash, and the difference, adjusted for any expenses you didn’t incur while you were unable to work.
In practice, you prove this with documents and testimony: multi-year tax returns to establish your baseline; recent profit-and-loss (P&L) statements; invoices and contracts you could not fulfill; bank statements showing reduced deposits; calendars or job logs; and medical records tying your work limitations to the injuries. If your business is seasonal or growing, use several years of data and explain the trend with records (for example, year-over-year revenue growth or a seasonal booking calendar).
Key Requirements
Causation: Medical records should show the accident caused your inability to work or reduced capacity.
Reasonable certainty: Prove the amount with reliable records (not speculation).
Net, not gross: Show lost net income or profits (subtract normal variable expenses you didn’t incur while not working).
Baseline earnings: Provide a consistent history (typically 2–3 years of tax returns) or a clear explanation if your business is new.
Mitigation: Show reasonable efforts to reduce losses (e.g., hiring temporary help, taking lighter duties within restrictions).
Consistency: Ensure your tax filings, P&Ls, invoices, and bank deposits line up.
Process & Timing
Get medical documentation: Ask your provider to write a work-status note describing your restrictions and how long they apply.
Assemble financial records: 2–3 years of filed tax returns (Schedules C/K-1), recent P&Ls, monthly bank statements, invoices/contracts, 1099s, mileage logs, and calendars or job schedules.
Calculate lost net income: Compare pre-accident average net income to post-accident income for the affected period. Adjust for any expenses saved (e.g., materials you didn’t buy, subcontractor hours not paid).
Document mitigation: Keep receipts for substitute labor and note efforts to reschedule or modify work within your medical limits.
Prepare a summary: Create a clear spreadsheet that ties to the source records. Summaries help decision-makers quickly verify your math.
Submit a demand to the insurer: Include medical records, work restrictions, your summary, and the backup documents. Insurers commonly take 30–45 days to review a complete package.
If settlement stalls: A lawsuit lets you use subpoenas and depositions to gather and explain records. Discovery often runs several months, followed by mediation in many cases.
Mind deadlines: North Carolina generally has strict filing deadlines for injury claims. Time limits vary by claim type and can change, so do not delay.
What the Statutes Say
North Carolina Rules of Evidence, Rule 701 permits owners to offer lay opinion testimony based on their personal knowledge and business experience (for example, explaining how the accident affected revenue and workload).
North Carolina Rules of Evidence, Rule 803(6) recognizes the business-records exception, allowing invoices, ledgers, bank statements, and P&Ls kept in the ordinary course of business to be admitted even if they are hearsay.
North Carolina Rules of Evidence, Rule 1006 allows summaries, charts, or calculations of voluminous records (like months of bank deposits and invoices) if you make the source documents available for review.
Exceptions & Pitfalls
Claiming gross revenue as “lost wages” without subtracting saved expenses can undermine your claim.
No tax returns or weak bookkeeping makes it harder to prove losses with reasonable certainty.
Ignoring seasonality or growth trends can misstate your baseline. Use multiple years to smooth out spikes and dips.
Failing to mitigate (for instance, refusing to hire temporary help when feasible) can reduce recoverable losses.
Inconsistent records (bank deposits that don’t match invoices, or returns that don’t match your P&L) hurt credibility.
Mixing personal and business spending in one account complicates proof. Separate accounts help.
Helpful Hints
Keep business and personal accounts separate to make deposits and expenses easy to trace.
Create monthly P&Ls and save vendor invoices, receipts, and job calendars. Good bookkeeping today makes tomorrow’s proof simple.
Ask your medical provider for clear work restrictions and expected duration. Update them if your condition changes.
Use a simple spreadsheet to compare average pre-accident net income to post-accident income by month, with notes explaining variances.
If you hire substitute labor to keep projects moving, keep those invoices. You can claim the cost as part of your loss.
Talk with a CPA to confirm your net-loss calculation aligns with your tax returns and normal accounting practices.
Disclaimer: This article is general information about North Carolina law, not legal advice. Reading it does not create an attorney-client relationship.
Talk to a Personal Injury Attorney
If you’re dealing with proving self‑employment lost wages after an accident, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at 919-313-2737.
