The impact of construction activity on the Croatian economy is becoming increasingly significant, making it an indicator of economic recovery. This thesis aims to present the development of this sector through two phases that have affected the entire industry, with particular attention given to the specifics of accounting, taxation treatment and monitoring of construction activity. The paper highlights the accounting and legal regulations concerning the financial reporting, bookkeeping, and taxation treatment based on the accounting classification of entrepreneurs. The key objectives of this work are to illustrate the accounting and tax treatment of construction activities through a case study, using the example of a microentrepreneur's business. The entrepreneur's business operations are analyzed, with a focus on the specific characteristics of this industry, such as domestic transfer of tax liability and the presentation of accounting situations that the entrepreneur prepares. Additionally, the entrepreneur's tax rights for deductible input tax and the emergence of tax liability are presented. Through the accounting treatment, the business records and financial statements that the entrepreneur must use as a micro-entrepreneur and a corporate income tax payer are also depicted.