Quick note: This information is educational only and is not legal advice. For guidance tailored to your situation, contact a licensed Connecticut attorney.

Detailed Answer

When you run your own business, proving income lost because of an injury requires translating business activity into credible, verifiable financial proof. Insurers and courts in Connecticut will look for reliable evidence showing (1) that you actually lost income because you could not work, and (2) a reasonable method for calculating the dollar value of that loss. Below are the main concepts and practical steps that show how that proof is prepared and presented.

1. Understand what counts as “lost income”

• Interim earnings: money you would have earned during recovery (lost invoices, canceled jobs).
• Net earnings vs. gross receipts: courts and insurers generally focus on net income or profit (what you would have taken home after ordinary business expenses), not just gross sales.
• Lost future earning capacity: if your injury causes long-term reductions to your ability to work, you may claim diminished future earnings; this typically requires expert testimony.
• Related losses: lost tips, commissions, bonuses, and certain business opportunities that you can document.

2. Build a foundation with contemporaneous and historical records

Start collecting and organizing documents that create a clear before-and-after picture of your business income. Typical, persuasive items include:

• Tax returns (Form 1040 plus Schedule C, or K-1s for partnerships/S-corporations). These show historically reported income and are persuasive to insurers and courts. (See IRS Schedule C info at irs.gov.)
• Business bank statements and deposit records that match receipts and invoices.
• Copies of invoices, contracts, or written job offers that were canceled because of the injury.
• Receipts for ordinary business expenses so you can show net profit (income minus expenses).
• Payroll records if you paid yourself a salary or drew regular owner distributions.
• Accounting records: ledgers, profit-and-loss (P&L) statements, bookkeeping reports (QuickBooks, Xero, etc.).
• Client emails or letters confirming lost jobs or delayed work.
• Personal calendars, appointment books, or contemporaneous diary entries showing scheduled work you missed.

3. Use reliable methods to calculate the loss

Your goal is to show a reasonable, supported calculation. Common methods include:

• Year-over-year comparison: compare earnings for the same period in prior years to isolate the loss attributable to the injury.
• Average weekly or monthly net income: divide reported net income by the year’s workweeks to get a typical weekly/net rate, then multiply by weeks missed.
• Invoice-based accounting: total up specific invoices or jobs you could not perform and subtract variable costs you would have avoided.
• Expert calculation: an accountant or forensic economist prepares a damage calculation that adjusts for taxes, saved expenses, and normal business fluctuations.

4. Address taxes, business expenses, and mitigation

Insurers and courts will expect you to account for:

• Taxes: damages are usually awarded as gross or net depending on the claim; show whether your calculation is pre- or post-tax and explain why.
• Saved expenses: if you did not incur certain variable business expenses while sidelined (e.g., subcontractor fees, supplies), subtract those from claimed losses.
• Mitigation: you must show reasonable efforts to limit losses (e.g., rescheduling clients, delegating work). Failing to mitigate can reduce recovery.

5. Strengthen your claim with sworn statements and expert support

A signed affidavit or declaration that describes how the injury affected your work and business routines helps authenticate records. For complex or high-value claims, hire an accountant to prepare a formal report or provide testimony that explains your calculations and supports your method.

6. Presenting evidence to insurers and Connecticut courts

When you submit a claim or file suit in Connecticut, package evidence clearly and professionally:

• Create a timeline showing when the injury occurred, dates you missed work, and when jobs were canceled or delayed.
• Include an itemized P&L for the relevant periods and reconcile those to your tax returns and bank deposits.
• Attach copies of invoices, contracts, and client communications that support lost jobs.
• If you use an accountant or economist, include their report and summary explaining the methodology used to compute losses, and be ready to have them testify if necessary.
• Keep originals and provide certified copies if a court requests authenticated records.

7. Practical Connecticut-specific steps

• Report the incident to any involved insurer promptly and follow notice requirements in your policy.
• Keep medical records showing how the injury limited your work capacity—medical proof links the injury to lost income.
• Use state resources for help: Connecticut’s Department of Labor provides general information about wage issues (https://www.ctdol.state.ct.us/). For civil procedures and filing, see the Connecticut Judicial Branch (https://www.jud.ct.gov/).

8. Common pitfalls to avoid

• Don’t rely solely on memory—unsupported estimates are weak evidence.
• Don’t double-count gross receipts and owner draws; focus on net business loss when appropriate.
• Don’t exaggerate: inconsistencies between tax returns and claimed losses will undermine credibility.

Helpful Hints

• Start collecting evidence immediately: the sooner you preserve invoices, emails, and bank records, the stronger your claim.
• Keep a daily log of work you could not perform and time spent on recovery or medical appointments.
• Make contemporaneous copies of canceled contracts or customer cancellations with dates and reasons.
• Work with a CPA to prepare an adjusted P&L showing what your income would have been absent the injury—this looks professional to insurers and courts.
• If your business has seasonal variation, compare the same months year-to-year instead of relying on short-term averages.
• Document saved costs: if not working meant you did not incur certain expenses, track and subtract them from gross loss calculations.
• Notify insurers promptly and follow their documentation checklists; ask for confirmation in writing when you submit records.
• Consider an initial consultation with a Connecticut personal injury attorney to evaluate proof strength and procedural steps—many offer free or low-cost case assessments.