Detailed answer — proving lost earnings as a self-employed person under South Carolina law
This guide explains how to document and prove income loss when you run your own business and cannot work after an accident. It outlines the evidence judges, juries, and insurers expect in South Carolina and gives practical steps you can take now to preserve and rebuild your claim.
Core idea: show what you normally earned, how the accident changed that, and the amount you actually lost
Civil claims for money lost because of an injury recover the income you would have earned but for the accident. For self-employed people, courts and insurers look for proof of your normal earnings (baseline), proof of the earnings during the recovery period, and proof that the lost earnings were caused by the injury.
What documents and records carry the most weight
- Tax returns and schedules: Personal Form 1040s and Schedule C (or partnership/LLC returns) for the prior 2–3 years. These show gross revenue and business expenses and help establish an average income baseline. (IRS forms and explanations: Schedule C information.)
- Bank and merchant account statements: Deposits and cleared payments that match invoices or cash receipts. These show actual money received.
- Invoices, contracts, and proposals: Signed contracts, booked appointments, and invoices for work you normally performed. These help prove income you would have earned and jobs you missed.
- 1099s and client payment records: 1099-NEC or 1099-MISC forms and any payment-ledger showing recurring or one-off clients. (Info on 1099-NEC: IRS – Form 1099-NEC.)
- Booking calendars, schedules, and digital records: Email confirmations, Google Calendar, project management systems, and appointment logs prove scheduled work you missed.
- Receipts and expense records: Proof of ongoing business costs. Courts often focus on net profit (lost earnings after ordinary expenses), so these matter.
- Client communications: Emails or text messages that show cancellations or rescheduling due to your injury, or client statements confirming lost work.
- Contemporaneous notes and a written diary: Daily or weekly logs of hours lost and tasks you could not perform help recreate the timeline.
- Expert reports: Forensic accountants, vocational experts, or an accountant’s affidavit can calculate lost profits and reliably present them to an insurer or court.
How to calculate lost earnings — a simple method
Use a reasonable, document-supported method to calculate lost earnings. Here is a common approach:
- Establish a baseline. Use tax returns and business records to calculate an average weekly or monthly gross income for the 12–36 months before the accident.
- Determine the recovery period. Identify the dates you reasonably could not work because of the injury.
- Compute gross lost revenue. Multiply your baseline weekly/monthly income by the number of weeks/months missed.
- Deduct saved expenses and ordinary business costs. If you did not incur some variable expenses because you did not work (materials, subcontractors), subtract those. The result is typically the lost net income (lost profits) that courts recognize.
- Account for partial work. If you did some work, document partial earnings. Net loss equals baseline minus actual net receipts during the recovery period.
Example (hypothetical): If your average monthly net profit was $6,000 (based on tax returns) and you missed three months, your lost net earnings could be about $18,000, documented with tax returns, bank deposits, booked work, and client cancellations.
Reconstructing income when records are missing
If you lack perfect records, you can still build a claim:
- Gather indirect evidence: client emails, marketplace transaction histories, platform records (Uber, Etsy, Fiverr), social media showing business activity, screenshots of past listings.
- Ask clients for statements or affidavits confirming past payments or lost bookings.
- Use bank/credit-card histories and supplier invoices to infer income streams.
- Hire a forensic accountant to reconstruct earnings from tax data, bank statements, and industry standards.
Prove causation and mitigation
To recover lost earnings you must link the loss to the accident and show you took reasonable steps to reduce the loss (mitigation):
- Medical records and doctor statements that show why and when you could not work.
- Documentation of job offers you rejected or could not accept because of restrictions.
- Evidence you sought alternative ways to work or subcontract work and why those were not feasible.
When to involve professionals
Consider hiring a lawyer and a forensic accountant when:
- Your income is significant or complicated.
- The insurer disputes your income figures or the cause of your loss.
- Records are sparse and must be reconstructed credibly for court or mediation.
South Carolina practical and procedural notes
South Carolina courts and insurers expect documented proof of loss and proof of causation. Preserve all original documents and communications. If your claim becomes a lawsuit, you will have deadlines and formal discovery rules. For general access to South Carolina statutes and court rules, see the South Carolina Code of Laws and statutory resources: South Carolina Code of Laws (statute master).
Important: This is general information only. It is not legal advice. Every case depends on its facts. Consult a licensed South Carolina attorney about your situation before making legal decisions.
Helpful hints — practical checklist to strengthen a lost-earnings claim
- Start collecting and preserving all business records right away. Photographs or scanned copies are fine if originals are at risk.
- Pull the last 2–3 years of tax returns and Schedule C(s) from your accountant.
- Save bank statements, merchant processor records (Stripe, Square, PayPal), and platform payout reports.
- Export calendars, appointment books, and client communications showing scheduled or cancelled work.
- Request statements from former clients confirming how much they paid you and how often.
- Keep a contemporaneous work/recovery diary: date, hours you could not work, reasons, and missed jobs.
- Do not post public statements or photos on social media that contradict your claimed injuries or limitations.
- Talk to a South Carolina attorney early about evidence preservation, damages calculation, and deadlines.
- If needed, hire a forensic accountant to prepare an expert calculation of lost profits and future earnings losses.
If you want, gather the basic documents listed above and speak with a local South Carolina attorney who handles personal injury and business-loss claims. They can evaluate your evidence, advise on the damages you can claim, and explain procedural deadlines.
Again — this is educational information and not legal advice. For advice about a specific situation, contact a licensed attorney in South Carolina.