How to Prove Lost Wages When You Are Self‑Employed — Oregon Guide

Disclaimer: This is general information only and is not legal advice. Consult a qualified attorney to discuss your facts and options.

Detailed answer

If you are self‑employed and an accident (auto crash, slip and fall, third‑party negligence, etc.) prevents you from earning income, you need to prove both (1) that the accident caused the loss and (2) the amount of that loss. Oregon courts and insurers expect documentary proof that ties the injury and medical restrictions to a measurable reduction in your business earnings. Below are practical steps and the types of evidence that tend to be convincing in Oregon claims.

1. Understand what you are proving: lost earnings vs. lost profits

For self‑employed people the loss is usually claimed as lost net earnings or lost profits (not an hourly wage). Gross receipts are not the end point — you must show the profit (money you would have kept) or the income you personally would have received after ordinary business expenses and taxes. Insurers sometimes consider gross revenue; a court or jury will focus on recoverable net loss and causation.

2. Key categories of evidence to collect

• Tax returns (Schedule C, K‑1, Form 1099s) for the past 2–3 years. These show historical income and help establish a baseline.
• Profit & loss statements and ledgers. Contemporaneous bookkeeping for months before and after the accident is very helpful.
• Bank and merchant account statements showing deposits from customers and clients.
• Invoices, cancelled checks, contracts, purchase orders, or job logs showing scheduled work you lost because of the injury.
• Communications with customers (emails, texts, proposals) showing cancellations, rescheduled jobs, lost contracts, or reduced scope of work tied to the injury.
• Receipts for business expenses and payroll you continued to pay (subcontractors you hired and still paid; rent on tools/space).
• Medical records, doctor’s notes, and work‑restriction forms that show when you were unable to perform business tasks and why.
• A contemporaneous diary or daily log showing attempts to work, missed work, and physical limitations. Date entries matter; contemporaneous records carry more weight than later reconstructions.
• Proof of mitigation: evidence you tried to work, accepted modified duties, or sought alternative revenue sources. Courts expect you to mitigate losses when reasonable.
• Expert reports: a forensic accountant or vocational economist can convert business records into an opinion of lost profits and can explain reasonable projections for future loss when applicable.

3. How to calculate a credible lost‑income number

Common methods include:

• Average past net income: compute a monthly or weekly average of net profit from recent tax returns and bookkeeping, then multiply by the period you were unable to work.
• Lost contracts or jobs: add up the profit you expected to earn on specific lost projects (use quotes, signed contracts, or communications to prove expectation).
• Partial loss calculations: if you could perform limited duties, calculate the difference between prior net income and actual reduced income during recovery.

When you present numbers, show the math. For example: prior 12‑month net income $72,000 (Schedule C) = $6,000/month. Injury prevented work for 3 months = $18,000 lost net income. Subtract any income actually earned during those months and add reasonable business expenses you still had to pay.

4. Prove causation — link the injury to the lost income

To recover, you must show the accident caused your inability to work. Medical records showing incapacity, doctor restrictions, and a timeline that lines up with lost invoices or canceled jobs all help. If you continued to work but at reduced capacity, document the reduction and why the injury caused it.

5. Use experts when necessary

Forensic accountants or economic experts are common in disputed claims. They translate tax and bookkeeping records into a reliable lost‑profits figure, adjust for seasonal or market fluctuations, and provide written reports or testimony. Accountants can explain reasonable deductions for business expenses and taxes so your claim targets recoverable income rather than gross receipts.

6. Preservation and timing

Preserve all records immediately. Scanning paper files, securing e‑mail, and making formal copies of bank statements and tax filings prevents later disputes. Contact an attorney early to avoid deadlines and to secure expert help. Failure to preserve key evidence weakens claims.

7. Insurance and settlement realities in Oregon

Insurers will try to minimize payouts; they may ask for broad releases, request your tax returns, or push for a low settlement based on gross receipts. Be prepared to explain why the net profit method is the appropriate measure. If the other side disputes your records, an expert can strengthen your position.

Oregon law governs recoverable damages for personal injury claims. For general authority on damages in Oregon, see Oregon Revised Statutes Chapter 31 (Damages): https://www.oregonlegislature.gov/bills_laws/ors/ors031.html

Helpful hints

• Start a contemporaneous injury and income log as soon as possible. Note dates, missed clients, and symptoms that prevented work.
• Keep original receipts, invoices, proposals, and bank records. Originals or certified copies have more credibility than reconstructed estimates.
• Deliver tax returns and bookkeeping to your accountant or attorney early so they can prepare a credible lost‑income calculation.
• Track mitigation efforts: show steps you took to find work you could safely perform or to hire help so work could continue.
• Understand the difference between gross revenue and net income. Ask an accountant which figure accurately reflects your personal loss.
• Be cautious with recorded statements to insurers. Consider consulting an attorney before giving recorded interviews or signing releases.
• If you are paid as a contractor (1099), attach supporting client records to show what you would have earned absent the accident.
• Consult a lawyer promptly. Early legal advice can help preserve evidence, meet procedural deadlines, and evaluate whether an expert is needed.

Example (hypothetical)

Jane is a self‑employed graphic designer in Oregon. Her tax returns show net income of $48,000 last year ($4,000/month). After an accident, her doctor restricted her from computer work for eight weeks. She lost several contracts (emails from clients cancelling), and her bank deposits show no income for those two months. Jane compiles tax returns, invoices, client emails, bank account statements, a doctor’s note, and a short diary of daily limitations. Her forensic accountant prepares a report showing a reasonable lost net income of $8,000 (2 months × $4,000). That packet — documents plus the accountant’s report — provides a solid foundation for a demand to the insurer or a court claim.

Next steps

1. Preserve and collect records now (tax returns, P&L, bank statements, invoices, emails, medical records).
2. Talk to an attorney who handles personal injury claims for self‑employed clients. They can advise on strategy and whether an expert is needed.
3. If you file an insurance claim, present your documentation and a clear calculation; if the insurer disputes the amount, rely on an accountant’s report and legal counsel.

Want help preparing your documentation or finding a lawyer in Oregon who handles self‑employed injury claims? Reach out to a local attorney’s office to discuss your situation and timelines — early action preserves options.