Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney to discuss your specific situation.
Understanding Lost Self-Employed Income Claims in Texas
After an accident caused by another party’s negligence, you may recover special damages for lost self-employed income. Under Texas law, these damages compensate you for net income you would have earned but lost due to your injury. See Texas Civil Practice & Remedies Code § 16.003 (two-year statute of limitations): statutes.capitol.texas.gov/Docs/CP/htm/CP.16.htm#16.003.
Step 1: Gather Detailed Business Records
Collect contemporaneous records showing your typical earnings before the accident:
- Profit-and-loss statements
- Invoices and client contracts
- Bank and credit card statements
- Receipts for materials and expenses
Step 2: Calculate Your Lost Profits
Compute your average net income per time period (daily, weekly, monthly):
- Total revenue minus business expenses
- Compare pre-accident and post-accident periods
- Use tax returns for at least two prior years to establish baseline
Step 3: Document with Supporting Evidence
Supplement your calculations with these items:
- Sworn affidavits from clients or vendors confirming canceled work
- Emails or texts scheduling then canceling services
- Expert reports from a forensic accountant
Step 4: Involve Professionals
Hire a certified public accountant (CPA) or forensic accounting expert to prepare a detailed lost-profits report. Under the Texas Rules of Evidence, business records summaries are admissible evidence (Tex. R. Evid. 1006). For full rules, see Texas Rules of Evidence.
Step 5: File Your Claim and Meet Deadlines
Submit your claim to the at-fault party’s insurer promptly. Texas Insurance Code § 542.055 mandates a prompt investigation and response by insurers: statutes.capitol.texas.gov/Docs/IN/htm/IN.542.htm#542.055. Remember the two-year deadline under Tex. Civ. Prac. & Rem. Code § 16.003.
Helpful Hints
- Track daily lost work hours and tasks in a dedicated journal.
- Keep digital and paper copies of all business records.
- Maintain a separate folder for accident-related documentation.
- Obtain third-party statements confirming lost projects or contracts.
- Set calendar reminders for Texas’s two-year statute of limitations and insurer deadlines.
- Consider preliminary budgeting for expert witness fees in advance.