Disclaimer: This article is for educational purposes only and is not legal advice. Consult a licensed Minnesota attorney for advice about your specific situation.

Detailed answer — What you must prove and how Minnesota law treats lost earnings

After an accident caused by another person, you may recover compensation for lost earnings and lost earning capacity. For self‑employed people, courts and insurance companies focus on lost net profits and the reasonable certainty of the loss. To win those damages you must show three things by a preponderance of the evidence:

1. That the accident occurred and caused injuries;
2. That your injuries prevented you from working or reduced your ability to earn; and
3. That you suffered a calculable financial loss (past and/or future).

There is no special Minnesota statute that replaces these basic requirements. For workplace injuries there is a separate workers’ compensation system (see Minnesota Statutes, chapter 176: https://www.revisor.mn.gov/statutes/cite/176). For non‑work (third‑party) accidents, lost earnings are handled as part of a personal‑injury claim in civil court or an insurance claim. For general reference to Minnesota statutes and case law resources see the Revisor of Statutes: https://www.revisor.mn.gov/statutes/.

What types of earnings can a self‑employed person claim?

• Past lost profits: net income you actually lost because you could not run your business.
• Past wages: if you normally pay yourself a salary or draw, you can claim the wages you missed.
• Future lost earnings / lost capacity: diminished ability to earn after recovery if injuries reduce your future productivity.
• Business overhead and extra costs: reasonable expenses you had to pay to keep the business running (or that you avoided paying and therefore must subtract).

How courts and insurers calculate loss

Insurers and courts will usually examine your business records to determine net losses. They typically use:

• Tax returns (Schedule C, K‑1s, corporate returns) to show historical income and trends;
• Profit & loss statements and balance sheets;
• Bank and merchant account statements, invoices, contracts, and client lists;
• Timesheets, calendars, project logs, and emails showing days/hours you could not work.

Common evidence Minnesota judges and adjusters expect

Collect and preserve contemporaneous documentation. The more independent, objective records you have, the stronger your claim:

• Federal and state tax returns for the previous 2–5 years;
• Business profit & loss statements and balance sheets;
• Bank and credit card statements showing deposits and expenses;
• Contracts, invoices, receipts, and canceled checks;
• Client communications showing canceled jobs or lost opportunities;
• Medical records linking your injuries to your inability to work;
• Expert reports (forensic accountant, vocational expert) when necessary to prove future loss or complex calculations;
• Photographs, diary entries, or contemporaneous notes showing days you were disabled or tasks you could not perform.

How to calculate a basic lost‑wage figure (illustrative)

One simple approach advisors use for past loss:

Average monthly net income before the accident × months unable to work = gross lost profit

Then subtract any ordinary business expenses you did not incur while you were out (saved expenses). That gives you a reasonable estimate of net lost profits. For future losses you must project reasonable future income and discount to present value, usually with expert help.

Special considerations for different business structures

• Sole proprietors: use Schedule C and bank records to show net profit lost.
• Single‑member LLCs (disregarded entities): similar to sole proprietors, rely on tax schedules and owner draws.
• S‑corporations and C‑corporations: separate owner salary from distributions; use W‑2s, corporate payroll, and corporate P&L.
• Partnerships: use K‑1s and partnership financials to show partner income loss.

Evidence of causation: linking the accident to the financial loss

Medical records are crucial. Your treating doctors must document the diagnosis, restrictions, and opinion that you could not perform work tasks. Vocational or occupational therapists that tie physical limitations to lost business activities strengthen your claim. A forensic accountant can correlate lost income to the period you were disabled and separate accident‑related loss from normal business fluctuation.

Burden of proof and standard

You must prove losses by a preponderance of the evidence (more likely than not). Courts require a reasonable degree of certainty in proving future losses — speculative claims usually fail. Use historical financial trends plus expert projections to meet this standard.

When workers’ compensation applies

If the accident occurred in the course of employment, workers’ compensation benefits often provide wage replacement and medical benefits under Minnesota law (see Minnesota Statutes, chapter 176: https://www.revisor.mn.gov/statutes/cite/176). A third‑party claim against a negligent non‑employer may still be available, but the relationship between workers’ compensation benefits and third‑party recovery can be complex. Consult counsel or your insurer.

Action plan — Step‑by‑step checklist to prove lost wages

1. Preserve all business records: tax returns, P&L, bank statements, invoices, contracts, receipts, canceled checks.
2. Keep a daily work diary showing hours worked, cancellations, and missed opportunities.
3. Get and keep all medical records and your provider’s work‑restriction notes.
4. Document mitigation: any steps you took to reduce losses (substitute workers, partial work, hiring help).
5. Collect third‑party evidence: client emails, vendor notices, or job cancellations caused by your inability to work.
6. Ask a CPA or forensic accountant to prepare a damages report for past and future lost profits when losses are significant or disputed.
7. Consider a vocational expert if your future earning capacity is in dispute.
8. Contact your insurer, but be careful with recorded statements—ask an attorney before giving a recorded statement if the claim is complex.
9. If needed, hire an attorney experienced with Minnesota personal‑injury claims involving self‑employed plaintiffs.

Helpful hints — Practical tips to improve your claim

• Use consistent bookkeeping software and keep business and personal accounts separate.
• Keep copies (scanned and paper) of all documents in a secure folder labeled for the claim.
• Maintain contemporaneous notes – judges and adjusters value records made close in time to the loss.
• Do not exaggerate losses. Courts compare claimed losses to tax returns and historic revenue.
• If you are paid in cash, reconstruct income with bank deposits, invoices, and client confirmations.
• Track saved expenses. If you saved rent or subcontractor costs while not working, subtract those saved costs from your lost profit claim.
• Ask your accountant to prepare normalized earnings if your business has seasonal or one‑time spikes.
• When in doubt, hire a lawyer early if the value of lost earnings is substantial; early legal help can preserve key evidence.