Detailed answer — how proof of lost earnings works under Wisconsin law

When a self‑employed person seeks compensation after an accident, the damages commonly sought for time lost from work are often called lost profits or lost earnings. In Wisconsin civil claims, a plaintiff must prove damages by a preponderance of the evidence — that it is more likely than not the damages occurred and their amount is reasonably certain. See Wisconsin statutes on civil damages (Chapter 895) for the statutory framework for personal injury damages: https://docs.legis.wisconsin.gov/statutes/statutes/895.

Key legal points for self‑employed claimants in Wisconsin:

• Lost earnings for a business owner are typically proved as lost net profits (not merely gross receipts). Courts look to what the business owner reasonably would have earned after ordinary business expenses.
• Damages must not be speculative. You need records and a reasonable method to calculate losses. Future losses require persuasive, reliable evidence (often an expert).
• If workers’ compensation covers the injury (e.g., injury while working and you are covered), that system may govern wage replacement differently. See Wisconsin workers’ compensation statutes for differences: https://docs.legis.wisconsin.gov/statutes/statutes/102.

Types of lost‑income damages a self‑employed person may recover

• Past lost earnings: income you actually lost from the accident date to the present.
• Future lost earning capacity: projected earnings lost because of lasting disability or reduced ability to run the business.
• Business overhead or replacement costs: extra costs paid to keep the business going (e.g., paying temporary help).

Standard of proof

You must present evidence making your loss amount reasonably certain. Pure speculation will be rejected. Courts accept reasonable estimates supported by contemporaneous records, tax returns, accounting statements, invoices, client communications, and expert analysis.

Concrete steps to prove lost earnings — documents and evidence

Collect as much of the following as possible. Organized, contemporaneous records carry the most weight.

1. Tax returns and IRS forms

   Schedule C (Form 1040) or other business tax returns for the last 2–5 years show historical net profit and are often the baseline a court will use. If you are a contractor who receives 1099s, bring those forms. Tax returns are presumptively reliable evidence of past income.

2. Profit & Loss (P&L) statements and balance sheets

   Monthly or quarterly P&L statements from your accounting software or your CPA that break out gross revenue, cost of goods sold, and net profit are vital for calculating lost profits.

3. Bank and merchant statements

   Bank deposits, credit card receipts, and payment processor records (PayPal, Stripe, Square) corroborate revenue and timing of lost work.

4. Invoices, contracts, and client communications

   Invoices that were not paid because you could not perform, contracts lost or delayed, cancellation emails or messages, and proposals will show specific projects and amounts lost.

5. Work logs and calendars

   Daily logs, calendars, scheduling software, or time entries showing appointments you missed or hours you could not bill support past losses.

6. Proof of mitigation or attempts to work

   Records showing you tried to work within medical limits, that you attempted to fill appointments, or that you hired replacements show reasonableness and help isolate true net loss.

7. Receipts for extra expenses

   Receipts for hiring temporary help, paying subcontractors, renting equipment, or increased advertising to replace lost business can be recoverable as related damages.

8. Medical records and work‑restriction notes

   Medical records that document when you were unable to work and any functional restrictions link the injury to lost earning capacity.

9. Expert reports

   For complex or future losses, forensic accountants, vocational experts, or economists can prepare analyses showing lost profits and present value. Courts often expect expert support for future‑value claims.

How to calculate lost earnings — practical methods

Common calculation approaches used in Wisconsin claims:

• Historical average method — Average monthly net profit from prior years (e.g., 2–3 year average) × number of months missed. Adjust for seasonality if your business fluctuates.
• Project‑by‑project method — Use specific canceled contracts or invoices to claim precise amounts when particular jobs were lost.
• Hybrid — Use specific lost contracts for some months and historical averages when specific evidence is lacking.

Make sure you:

• Use net profit (revenue minus ordinary, necessary expenses) rather than gross receipts.
• Subtract saved expenses (costs you did not incur because you stopped working) to avoid overstating losses.
• Discount future losses to present value (an accountant or economist can do this).
• Document assumptions and methodology so a judge or jury can follow the calculation.

Example (hypothetical): A consultant’s 3‑year average net profit is $4,000/month. An accident prevented work for 4 months. Basic lost profits = 4 × $4,000 = $16,000. If you saved $500/month in variable expenses while idle, net recoverable loss = 4 × ($4,000 − $500) = $14,000.

Common obstacles and how to address them

• Challenge: No formal bookkeeping. Solution: Reconstruct income from bank statements, client emails, invoices, and tax returns; get a CPA to prepare a reliable reconstruction.
• Challenge: Seasonal or volatile income. Solution: Use multi‑year averages and show seasonality with records; an expert can model expected income absent the injury.
• Challenge: Opposing party argues losses are speculative. Solution: Provide contemporaneous proof and expert opinions; explain reductions for saved expenses and efforts to mitigate.

Helpful Hints

• Start collecting all business records immediately. Contemporaneous documentation has the most credibility.
• Keep separate business and personal accounts going forward to simplify proof of business losses.
• Document attempts to mitigate losses (offered remote services, hired temporary help, or subcontracted work).
• Talk to an accountant early — they can reconstruct lost income and prepare financial exhibits for settlement or trial.
• For claims of future lost earning capacity, expect to need an expert who can explain life expectancy, business longevity, inflation, and discounting to present value.
• If you have workers’ compensation coverage or another insurance source, understand how those benefits interact with a third‑party claim; different rules apply. See Wisconsin workers’ compensation statutes: https://docs.legis.wisconsin.gov/statutes/statutes/102.
• Be honest and consistent. Inconsistencies in records or testimony undermine credibility and can reduce recovery.