One of the most disputed aspects of any personal injury case is the determination of damages. It is common for insurance carriers and the attorneys who represent them to claim that the lost wages and economic losses are far less than those the victim has suffered. This is especially true in situations where the victim is self-employed. If you are such a victim, it will be important that you retain an experienced attorney to assist you.
There are multiple issues that arise in car accident cases that involve a self-employed victim. These include:
- Computing the amount of income actually lost by the victim
- Accounting for potential loss of business growth
- Presenting the losses to a jury
Each of these issues will be discussed in turn.
Computing The Income of a Self-Employed Car Accident Victim
When a car accident victim is a W2 employee then calculating their damages can be straightforward. It is simply a matter of adding up the hours or salary they missed out on while they were recovering from the accident. Computing the income of a self-employed individual, however, requires more steps. The formula used to make such a calculation will depend on the structure of the victim’s business.
Computing the Income of Schedule C Business Owners and Single Member LLCs
If a self-employed individual operates with a business license but has not started a formal business entity, then they are considered a “Schedule C” earner. This is also true for someone who operates a single-member LLC. The income for such earners is their business profit. This profit is calculated by taking their total revenue and subtracting their total expenses. Multiple steps can be involved, however, when determining their “expenses.” This is due to the fact that some equipment and other items must be depreciated over time. Calculations of this depreciation are often performed by an accountant or financial expert.
Computing the Income of an S-Corporation Owner
If a self-employed individual is operating as an S-Corporation or an LLC that has opted to be taxed as an S-Corporation, then their financial calculations will be more complicated. This is due to the fact that such business owners are employees of the company as well as owners of the business. This means that the individual’s income consists of both paychecks and profits. As an example, suppose Joe’s business earns $100,000 in revenue. Now suppose that Joe pays himself a $40,000 salary in the form of a paycheck. Also, the business has $10,000 in additional expenses. This means that the business has $50,000 in profits (revenue minus salaries minus expenses) and Joe’s total income is $90,000 (profits plus salary). While this example is straightforward, accounting for a business’ profits can become complicated for S-Corporation owners just as they would for one operating a Schedule C business.
The Damages From Lost Business Growth
A car accident victim is entitled to future wage losses which stem from the wreck in addition to wages they have already lost. If it is projected that they are going to be off of work for the next year, then their lost wages would be equal to the time missed from work to date plus the next year. These amounts are easily determinable through the review of paystubs, W2 forms, tax returns, etc. Calculating lost future wages for a self-employed person is different, however, due to the fact that they will also be missing out on potential business growth.
One of the reasons why individuals choose to work for themselves is the opportunity to grow their income by growing their business. Aspiring entrepreneurs often set personal goals of growing their revenue by a certain amount each year. If a self-employed person is unable to work due to the accident, then they are unable to grow their business. When presenting a claim for lost wages, it will, therefore, be necessary to establish the amount in which revenue and profits would have likely grown over the period of time which will be missed. This requires an analysis of the business’ history, market trends, efforts you would have made to grow the company, and more. The final number proposed will typically be disputed by the defendant and it may be necessary to retain an expert in order to determine such losses.
Proving a Self-Employed Car Accident Victim’s Losses to a Jury
When presenting a case on behalf of a self-employed victim, it is necessary to present proof of the business’ income and lost growth opportunities. Such proof can come in the form of expert testimony, tax returns, sales invoices, contracts, and testimony from customers. The defense will be given an opportunity to present its own evidence on what amount, if any, you should receive for time away from your business. These defense efforts will include the calling of their own experts, their own claims, a discussion of business trends, etc.
At the end of the case, the jury will decide which side’s evidence should be given more credibility. They will then decide the amount which the victim will receive. Given the complex nature of cases that involve self-employed people, it is important that you retain an attorney with extensive trial experience. Having counsel who is experienced in presenting cases to the jury will help to ensure that information regarding your damages is conveyed in a clear and easy-to-follow manner.
Contact a Fort Lauderdale Attorney if You Have Been Involved in a Car Accident
If you have been involved in a car accident, it is important that you speak with a lawyer right away. This is especially true if you are self-employed as the more time you miss from your business, the harder it may be for the operation to recover. Our office prides itself on providing a high level of service and we look forward to speaking with you. Contact us online or by phone today to speak with a Fort Lauderdale car accident attorney.