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This explains how someone who is self-employed in Montana can document and prove lost earnings after an accident so they can make an insurance claim or sue a negligent party. This is information to help you prepare — it is not legal advice.

What you must prove

To recover lost earnings you generally must prove three things:

• You actually lost work time because of the accident (medical care, recovery, disability, or property loss).
• You would have earned income during that time but for the accident.
• The amount of the lost income, shown with reasonable certainty (not speculation).

Types of documents and records that prove lost income

Because self-employed income is not shown on an employer paystub, you need contemporaneous business and tax records that show regular earnings and the reduction after the accident. Useful evidence includes:

• Tax returns and schedules (federal Form 1040 and Schedule C, partnerships K-1, or other filings). These show historical income trends and are persuasive evidence of earnings capacity.
• Bank statements showing deposits from clients or customers and withdrawals for business expenses.
• Client invoices, receipts, paid bills, and copies of contracts or purchase orders that show work you regularly performed and work you lost due to the accident.
• Accounting records or profit & loss (P&L) reports from bookkeeping software (QuickBooks, Wave, etc.).
• 1099s or other income reporting forms from customers or platforms you use (e.g., gig-economy reports).
• Calendars, appointment books, project management entries, email threads, or texts showing scheduled work you missed.
• Estimates, cancelled checks, and receipts for business expenses you still had to pay while not working.
• Photographs or documentation that show interruption to operations (damaged equipment, closed workspace).
• Evidence of steps you took to mitigate losses (e.g., offers to subcontract, emails to customers rescheduling work).
• Affidavits or statements from clients, suppliers, or business partners confirming lost jobs or reduced hours.

How to calculate the loss

Common calculation approaches:

• Net profit method: Use net profit (business income after ordinary and necessary expenses) as the basis for lost earnings. Tax returns and P&L statements support this.
• Average earnings method: Compute an average of earnings over a representative prior period (last 1–3 years) and multiply by the time you missed. Use seasonal adjustments if your business is seasonal.
• Per-job method: If you invoice per job, list the specific jobs lost and attach the corresponding invoice amounts and client statements.

Note: Many courts and insurers look to net income rather than gross revenue because business expenses that would have been paid regardless reduce the actual loss to the owner.

Expert help that strengthens your proof

• Accountant or CPA: Can prepare a lost-income computation, adjust tax figures for non-cash items (depreciation), and explain business records to a judge or adjuster.
• Forensic accountant or business valuation expert: Useful when records are incomplete or when you need to prove future lost earning capacity.
• Vocational expert: Shows how an injury changed your ability to work and what work you could have performed without the injury.

How records get admitted in Montana proceedings

Business records and tax returns are commonly admitted into evidence. Montana’s rules of evidence explain hearsay exceptions for business records and other documentary evidence that courts accept when properly authenticated. Montana’s rules are available from the Montana Courts (see the rules of evidence): Montana Rules of Evidence (PDF). Proper foundation and authentication (who prepared the record, how it was kept) are important.

Practical timeline and steps to take right away

1. Preserve all records. Make copies of tax returns, bank statements, invoices, contracts, and bookkeeping files. Save digital backups.
2. Track days/hours missed. Keep a contemporaneous log of days you could not work and what prevented you from working (medical visits, recovery, repair of tools, etc.).
3. Collect client statements. Ask clients in writing to confirm cancelled jobs, missed deadlines, or reduced scope because of the accident.
4. Get tax transcripts if needed. If someone questions your tax returns, you can request IRS transcripts to corroborate reported income.
5. Hire an accountant or attorney early if your records are incomplete or the loss is large. That helps preserve evidence and plan proof strategies.

Common problems and how to address them

• Incomplete records: Reconstruct income using multiple sources—bank deposits, client emails, and platform reports. An accountant or forensic expert can help.
• Seasonal business: Use multi-year averages and explain seasonality with supporting documents (prior years’ books, client contracts).
• Disputes over net vs. gross: Prepare both calculations and explain business expenses; courts often award net lost earnings.

When insurance or other parties will challenge your claim

Insurance companies and defendant lawyers look for inconsistencies. Be prepared to:

• Show contemporaneous records rather than later reconstructions.
• Explain and document any gaps in work unrelated to the accident.
• Show mitigation efforts (what you did to reduce losses).

Disclaimer: This information is educational and general in nature. It is not legal advice. For advice about your specific situation, consult a Montana-licensed attorney.

Helpful Hints

• Start preserving documents immediately—delay weakens your claim.
• Keep a contemporaneous diary or log of missed work and why you missed it; dated notes are more credible than later memory alone.
• Use multiple independent sources to corroborate earnings (tax returns + bank deposits + client statements).
• If you use bookkeeping software, export and save transaction-level reports (not just summary screens).
• Ask clients for short written statements confirming lost jobs or payment reductions; even brief emails help.
• If you hire experts, ask for a written report that explains their methodology and ties it to your records.
• If you are pursuing a legal claim, be mindful of Montana deadlines and preserve evidence early; consider consulting a Montana attorney about timelines and filing requirements.
• When calculating future losses, include realistic assumptions and document how you reached them; courts favor conservative, well-documented projections.

Relevant Montana resources that may help with records and rules: Montana Courts (rules of evidence): https://courts.mt.gov/Portals/189/rules/MTRulesOfEvidence.pdf. Montana Department of Revenue (for tax questions): https://mtrevenue.gov/. Montana Department of Labor & Industry: https://dli.mt.gov/.