Disclaimer
This article provides general information and education only. It does not constitute legal advice. Consult a qualified attorney to address your specific situation.
Detailed Answer
After an accident in Massachusetts, self-employed individuals can claim lost income as part of a personal injury action. Unlike employees who receive wage statements, self-employed workers must prove net profit losses. Follow these steps to document and claim your losses:
1. Gather Financial Records
Collect all relevant business documents for at least 12 months before and after the accident date. This includes:
- Invoices and receipts.
- Bank and credit card statements.
- Client contracts or service agreements.
2. Review Tax Returns and Schedules
Use your federal and state tax returns (Form 1040 Schedule C) to establish baseline earnings. Copies of returns provide official proof of net business income before and after the incident.
3. Prepare a Profit and Loss Statement
Create a monthly profit and loss statement showing gross revenue, expenses, and net profit. Highlight the period impacted by your accident-related injuries. This statement serves as a clear summary for insurers or the court.
4. Consult a Financial Expert
Consider hiring a forensic accountant or certified public accountant (CPA). An expert can:
- Verify your calculations.
- Provide an affidavit or report admissible in court.
- Testify about your loss of earnings and future income impairment.
5. Draft and Send a Demand Letter
Before pursuing litigation, send a detailed demand letter to the at-fault party or insurer. Include:
- Summary of the accident and injuries.
- Itemized list of lost net profits with supporting documents.
- Request for a specific compensation amount.
6. File a Personal Injury Lawsuit (if necessary)
If negotiations fail, file suit within Massachusetts’ three-year statute of limitations for personal injury claims under M.G.L. c. 260 § 2A. In your complaint, detail your economic losses and attach copies of:
- Profit and loss statements.
- Tax returns.
- Expert reports.
During discovery, produce bank records, invoices, and communications that show your income trajectory. The court will assess your net profit losses and may award prejudgment interest under M.G.L. c. 231 § 6C.
Helpful Hints
- Maintain meticulous records of all business transactions year-round.
- Update profit and loss statements monthly to track income fluctuations.
- Photocopy or scan originals to preserve receipts and invoices.
- Document your efforts to mitigate losses, such as hiring temporary help.
- Keep a daily journal of accident-related downtime and activities.
- Work with a CPA who understands personal injury claims.
- Consult an attorney early to protect your rights and meet deadlines.