Detailed Answer

If you run your own business or work as an independent contractor and suffer an injury in an accident caused by someone else, you can often recover lost earnings. Insurers and courts require proof that (1) you actually lost earnings because of the accident, and (2) the loss was caused by your injury. As a self-employed person, the proof standard focuses on demonstrating past income patterns, the earnings you would have generated but for the injury, and reasonable documentation tying the interruption to the accident and medical restrictions.

What counts as recoverable earnings for the self-employed?

• Net business income you would have earned (gross receipts minus ordinary and necessary business expenses).
• Income you lost while unable to perform services (client work, billable hours, productions, sales, gigs, etc.).
• Reasonable reductions in future earning capacity when the injury causes a lasting impairment.

Types of documents that prove lost earnings

Collect as many of the following items as apply. Redundancy helps—multiple sources that tell the same story strengthen your claim.

• Tax returns and Schedules (e.g., Form 1040 with Schedule C, or corporate returns). These show historical earnings trends.
• Profit & Loss (P&L) statements and balance sheets for the relevant months/years.
• Bank statements and credit-card merchant records showing deposits and payments.
• Invoices, contracts, purchase orders, and 1099s that document work you would have done.
• Client communications (emails, texts, contracts) showing cancelled jobs or lost bookings because of injury.
• Calendars, appointment logs, time sheets, and scheduling/booking platform records (e.g., booking confirmations or cancellations).
• Receipts for business expenses saved because you could not perform work (used to compute net loss).
• Payroll records if you employ others showing you had to stop working or delegate tasks.
• Photographs, videos, or site logs showing work left incomplete.
• Medical records and physician restrictions tying your inability to work to your injury (doctor’s notes, rehab plans).
• Affidavits or written statements from clients, vendors, or subcontractors verifying lost jobs.
• Expert reports from accountants or vocational experts who can calculate past and future earnings losses.

How to calculate the loss (practical steps)

Exact methods vary by business type. A common approach for a self-employed claimant:

1. Assemble at least 12–36 months of pre-accident financial data to show your normal earning pattern (tax returns, bank deposits, monthly P&Ls).
2. Compute average monthly net income (gross receipts minus ordinary business expenses) for the comparable pre-accident period.
3. Document the actual months after the accident in which you lost work. Show specific jobs lost or reduced production and the resulting income you actually received.
4. For each affected month, calculate: Expected net income (from average) − Actual net income = Monthly lost earnings.
5. Subtract amounts you saved because you weren’t working (e.g., lower material or subcontractor costs) where appropriate. The point is to measure actual economic loss to you, not gross revenue alone.
6. If claiming future lost earnings or diminished earning capacity, use historical trends and an expert projection. Document assumptions (growth rates, client retention, market conditions) and link them to your prior performance.

Medical proof and causation

To link the lost earnings to the accident you will need medical proof that your injuries prevented or limited your ability to work. Keep a contemporaneous record of symptoms, treatment visits, and doctor-imposed restrictions. Treating physicians or rehabilitation specialists should describe activity limitations and estimated recovery time. Without medical records explaining why you could not work, insurers will dispute causation.

When to use an expert

Consider hiring a CPA, forensic accountant, or vocational expert when:

• Your business income fluctuates seasonally or is irregular.
• You claim substantial future lost earnings or business impairment.
• Opposing parties question your bookkeeping or calculations.

An expert can prepare a clear, court-ready damages report and may appear at deposition or trial to explain methodology.

Common defenses you should prepare for

• Argument that you failed to mitigate losses (you must reasonably try to limit your losses by, for example, delegating work or seeking alternative work).
• Claims that your bookkeeping is incomplete, inconsistent, or unreliable.
• Assertions that the income decline was due to normal business cycles, client loss unrelated to the accident, or pre-existing conditions.

Special rules to remember for Maryland claimants

Maryland courts allow recovery for lost earnings when shown with reasonable certainty and causation. Timeliness matters: do not delay starting your claim. If the accident happened at work, workers’ compensation rules, benefits, and processes may apply instead of a personal-injury suit. Preserve records and consult counsel early so you do not miss procedural deadlines.

How to present your proof to an insurer or at trial

Organize evidence chronologically and produce a one-page damages summary that includes:

• Pre-accident average monthly and yearly net income.
• Month-by-month actual income after the accident with direct ties to cancelled jobs.
• Net loss calculations with citations to bank statements, invoices, and tax returns.
• Medical records showing restrictions and treatment timeline.
• Any expert report used to support projections.

Practical hypothetical example

Suppose you are a contractor who averaged $8,000/month net over the prior 18 months. After the accident, you missed three months of work and collected only $1,000 total during that span. Your monthly lost earnings would be calculated as $8,000 − actual/month for each month missed (e.g., $8,000 − $333 = $7,667/month), adjusted for any saved expenses (materials you didn’t buy) and supported by cancelled contract emails, invoices, and bank records. If an expert projects a three-month recovery followed by partial permanent loss, that projection needs documented bases (past growth, client lists, average job values) to be persuasive.

Next steps you should take right now

1. Seek immediate and ongoing medical care and keep every medical record and bill.
2. Collect and preserve financial records (tax returns, P&Ls, bank statements, invoices, client messages, booking logs).
3. Keep a contemporaneous diary of lost work, missed appointments, and efforts to mitigate.
4. Photograph and save evidence of the accident scene and work left incomplete.
5. Consult a Maryland personal-injury attorney or a lawyer familiar with self-employment loss claims early to evaluate deadlines and strategy.

Helpful Hints

• Start documenting losses immediately—contemporaneous records carry more weight than retrospective estimates.
• Maintain separate business and personal bank accounts to make financial tracing easier.
• Keep pre-accident financial summaries (12–36 months) to show normal earning patterns.
• Save client cancellations, emails, and platform logs showing lost bookings. Screenshots are acceptable if backed up with originals.
• Don’t assume gross revenue equals lost earnings; calculate net income after ordinary expenses to show true economic loss.
• Ask your accountant to prepare a clean P&L and, if needed, an expert loss report early in the case.
• Document any steps you took to mitigate (offering subcontractors work, trying to do light duties, or accepting smaller jobs) so you aren’t accused of avoidable losses.
• Keep a medical activity log: date, symptoms, treatments, and restrictions. Link each period of limited work to a specific medical record.
• If the injury occurred while working, investigate workers’ compensation options in Maryland before filing a separate suit.

Disclaimer: This article explains general principles and practical steps under Maryland law to help you gather proof of lost earnings as a self-employed person. It is not legal advice. For advice about your specific situation, contact a licensed Maryland attorney who handles personal injury and economic-damages claims.