Detailed answer — what you need and how to present it

Self-employed people must prove lost earnings differently than employees. Insurers and courts will want a clear link between the accident and the income you lost, and a reliable method showing how much you actually lost (usually net profit, not gross receipts). Follow these steps:

1) Decide whether you’re claiming lost wages, lost earnings capacity, or lost business profits

For employees, “lost wages” usually means payroll lost during recovery. For self-employed persons, the better legal claim is often lost business income (net profit) or lost earning capacity. Net profit is the amount you would have kept after ordinary business expenses. Courts and insurers prefer net figures because expenses would have continued whether you worked or not.

2) Gather core documentary evidence

• Recent tax returns (personal and business returns, e.g., Schedule C, Form 1040, K-1s) for at least 2–3 prior years to show baseline income and seasonality.
• Profit-and-loss statements, balance sheets, and general ledgers created before the accident.
• Invoices, receipts, sales records, and contracts showing scheduled or expected work that you missed because of the accident.
• Bank and merchant-account statements showing deposits tied to business activity.
• 1099s and other payer records if you are an independent contractor.
• Appointment calendars, emails, text messages, and client confirmations proving cancellations or lost bookings during your recovery.
• Time logs, production/output records, or before-and-after comparisons (e.g., number of jobs completed per week before the accident vs. after).

3) Contemporaneous, situation-specific proof

Contemporaneous records are highly persuasive. Examples include:

• Daily work logs or a written diary showing hours you could not work.
• Client messages that show canceled jobs or postponed projects.
• Receipts for hiring temporary help or subcontractors to cover missed work (to show mitigation and the cost to keep business running).
• Photos of unfinished work or of injuries that prevented you from performing your normal tasks.

4) Use a reasonable and documented method to compute lost income

Common methods include:

• Average-net method: compute average monthly net income for prior years (using adjusted gross income, Schedule C net profit, or profit-and-loss statements), then multiply by the months you could not work. Adjust for seasonality.
• Contract/Invoice method: for specific lost contracts, use the contract value less associated variable costs to show lost profits.
• Projection method: when the injury affects future earning capacity, prepare a reasonable projection based on historical growth rates, accompanied by supporting documents and expert analysis.

Always show how you handled business expenses during the downtime: some fixed costs (rent, insurance) continued even if you did not work, and must be separated from the actual income loss.

5) Expert and professional support

A certified public accountant (CPA) or forensic accountant can:

• Reconstruct income from bank deposits and the business records you provide.
• Separate personal withdrawals from business income.
• Prepare an affidavit or report explaining the computation in admissible terms.

A vocational expert can help if you claim long-term loss of earning capacity.

6) Authentication and admissibility of records in Mississippi

Business records and tax returns are commonly admitted if they meet authentication requirements and fall under the business-records hearsay exception. Mississippi follows rules similar to the national model for admitting business records; check the state’s Rules of Evidence for particulars and authentication steps (for example, foundation testimony or a custodian declaration from your business or CPA) so the records are admissible in court or persuasive to an insurer. See Mississippi court rules and evidence resources: Mississippi Rules and Forms.

7) Prove causation: connect the accident to the loss

Show that the accident—and not unrelated business trends—caused the loss. Useful evidence includes:

• Medical records showing the injuries and work restrictions.
• Correspondence notifying clients of your unavailability due to injury.
• Evidence of steps you took to mitigate losses (e.g., offering remote services, hiring temporary help).

8) Be ready for insurer scrutiny and deposition

Insurers will test your claim. Expect requests for documentation, recorded statements, and possibly an independent medical examination. Have your records organized and your computation explained clearly. If litigation follows, be prepared to present the underlying records and expert reports in discovery and at trial.

9) Practical hypothetical example (illustrative)

Hypothetical freelance graphic designer. Average net profit over last 3 years: $4,000/month. Accident causes 3 months of inability to work. She produces:

• 3 years of tax returns and Schedule C showing average net profit.
• Invoices for canceled projects totaling $9,000.
• Bank records showing deposits before and after the accident.
• An affidavit from her CPA supporting the $12,000 lost-net-profit calculation (3 months × $4,000).

She subtracts expenses that she would have incurred regardless (fixed rent already paid) and documents mitigation attempts. That combination of contemporaneous records and expert support makes a credible claim.

10) Timing and next steps

Don’t delay. Preserve all records (paper and electronic). If you plan to pursue a claim, consider consulting a lawyer early to preserve evidence, obtain necessary declarations, and understand deadlines under Mississippi law. You may also want a CPA to prepare a formal lost-income report.

Helpful Hints

• Start a dedicated folder (physical and digital) the day of the accident. Save emails, texts, invoices, and calendar entries.
• Keep originals of tax returns, bank statements, and receipts. If originals aren’t available, get certified copies.
• Separate business and personal finances going forward. Clear accounting makes future claims easier to prove.
• Document mitigation efforts: notes about clients you contacted, offers made, and subcontractors hired.
• Get a written statement from major clients confirming cancellations or lost work attributable to your injury.
• Request a CPA reconstruction early if your records are incomplete (they can use bank deposits and third-party records to fill gaps).
• Be conservative and transparent in your calculations—courts and juries distrust speculative numbers.
• Ask insurers for an itemized explanation of any denial or reduction of your lost-income claim, and keep all communications.
• Preserve social-media posts and photos showing your activity level before and after the accident, but avoid posting about your claim publicly.
• Consult an attorney if the insurer disputes causation, the computation, or refuses to pay. Early counsel helps preserve evidence and protect deadlines.