A: The most important documents in proving your loss of income are your tax returns for a few years before the collision. They show the trend over the years in your gross revenue. They also show the percentage of your total income you spent on various business expenses.

If you did not declare all your income it will be difficult, but not impossible, to show that your income was higher than you declared it to be.

Your loss of income can be assessed as follows:
1. the revenue you lost since the collision considering the trend in your revenue before the collision and considering economic conditions before and after the collision,
2. plus the additional labour expenses you incurred to make up for your reduced ability to contribute to your business,
3. less the “variable expenses” you saved as a result of your reduced revenue. These are expenses that vary with the amount of the revenue of your business. They include the costs of bookkeeping, operating your vehicle, long distance telephone calls, office supplies, the input cost of goods you produce and, in the case of construction businesses, the cost of building materials.
4. less taxes on your net loss of income.

For example, if you lost revenue of $100,000 since the collision and in the three years before the collision your variable expenses averaged 27% of your revenue your loss of income would be $100,000 less $27,000 in variable expenses you saved plus additional labour expenses you incurred less taxes.

Sometimes the accountant your business uses may be able to prepare a report calculating your lost income. However frequently this is outside their area of expertise. Lawyers often hire accountants or business valuators who are trained and certified in quantifying business losses for legal purposes.