Each entrepreneur with the head office in Republic of Croatia is obliged to keep business books and to make financial reports in accordance with basic principles of orderly bookkeeping. The obligation of bookkeeping exists for each legal person performing profit-oriented economic activity, as well as for each physical person independently performing profit-oriented economic activity, provided that by special regulation this person is designated as an income taxpayer. The books must be kept so that within required term the third person is enabled an insight into the business operations and state of the company.       Fines for not keeping business books or not submitting financial reports stipulated by the mentioned Law are very severe.     In the Republic of Croatia International Bookkeeping standards are applied. Entrepreneurs that are obliged to keep business books and draw financial reports in accordance with stipulations of the Bookkeeping Law are classified as small, medium and major, depending on the balance amount after deducting the loss and according to the average, annual number of employees.   A fine of 5,000.00 to 10,000.00 kn is foreseen for the legal representative of the entrepreneur if he: • does not keep business books • does not take care of business books • does not make basic financial reports • does not obey the principles and methods of        estimation • does not make the annual report.