Home-based businesses drive the economy and provide financial security for their owners, but they can also cause disturbances -- traffic, noise or inventory fire hazards, for example -- that can have an effect on surrounding neighbors. As a result, most cities and other organizations require that home-based businesses comply with several rules, ordinances and laws. Business laws are strictly enforced by a number of entities and if you suspect, with legitimate concern, that a home business is operating illegally, you have several options for reporting the alleged violation.

Contact the state secretary's office to report businesses operating without a license. Most states require that a business register and perform additional tasks required by law through the secretary's office. For example, a business that operates as a corporation or limited liability company should have the appropriate documentation on file with the state's regulatory office.

Call the state's department of taxation if you suspect a business of illegally selling taxable goods or services. To illustrate, a business that sells crafts or other products is required to tax items sold within the state and pay into a tax account.

Call the Internal Revenue Service (IRS) for businesses that evade taxes. Complete form Form 3949-A and include the name of the business, a description of the alleged violation and any additional information.

Contact the home owner's association (HOA) for the neighborhood in which the business operates. Many HOAs have firm rules regarding the operation of businesses in the home.

Call the professional licensing board for the business' industry. For example, an illegal accounting practice should have licensing through the state's certified public accounting authority. Contact the board and file a report or complaint. The board can take the complaint and issue any necessary disciplinary action, if required.