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How to Calculate Lost Wages When You’re Self-Employed

December 7, 2020
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If you have experienced a personal injury and are filing a lawsuit to recover damages, it is important to factor in all types of damages you may have incurred. For many people, this will include any lost wages that you would have earned if you were able to work. If you are self-employed, however, this can be more complicated and confusing because you likely don’t receive a normal paycheck. For those who are self-employed, it may be easier to refer to it as lost income rather than lost wages. From a legal perspective, there is no difference. Rather than simply showing your pay stubs to the courts, however, you will need to take some extra steps to accurately calculate your lost income.

Calculating Consistent 1099 Income

Many people who are self-employed will receive 1099 forms from each client they perform work for. If that is the case for you, calculating your lost income will be relatively easy. If your income is approximately the same in the current year as it was in the previous year, you can look at your net income on your Schedule D form from your most recent tax returns. That will show your annual income. From that, simply calculate how much time you are unable to work, and what percentage of your annual income that works out to be.

Small Business Owners

If you own a small business that relies on you for a large portion of the earnings, you can file for the entire amount that your business will likely lose during the time you can’t work. This may be significantly more than just the profit that you would have personally received. Calculating this amount is done differently based on a variety of factors. For example, if your business generally brings in the same amount each week all year, you just calculate the total lost amount based on the time you couldn’t work. If your business income varies based on season or other factors, you can make the calculations based on how much the business made during the same time frame the previous year.

Lost Opportunities

Those who are self-employed know all too well that it is essential to always be pursuing new clients and growth opportunities. In many cases, you will be able to ask for damages related to lost opportunities. For example, if you typically bid on 5 new contracts per month and get 2 accepted, the damages should include the money you will lose from the future work from these potential contracts.

 Every Situation is Unique

For some people who are self-employed, calculating your lost income will be very simple. For others, it will require complex calculations and estimates. No matter your situation, it is important that you work with an experienced attorney who can help ensure you are requesting the proper amount, and fight for the damages you deserve. If you have been injured in Florida or New York, Goss Law is here to help. Contact us to discuss the specifics of your situation and get legal advice on what your next steps should be.

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