WHY REPORT THEM?

There are still 1000s of unregistered business sellers directly defrauding eBay (by exploiting private seller free listing days) and you (by denying you the consumer protection required by law).     eBay's fees to honest sellers would be lower if these frauds were not still out there.

SPOTTING THEM

Anyone with feedback over 500 should be looked at - less if the f/b has been garnered in a few weeks. Some frauds register, sell a few hundred items quickly then deregister and start again with a new ID. Bay could help by splitting f/b into buyer and seller figures but they won't. There are sellers with 1000+ selling feedbacks every year for over 6 years who are apparently not running a business.  Until recently a Powerseller did not need to be registered as a business seller - how crazy is that?
Anyway: check the completed items - check the feedback. Look closely if you are suspicious - one fraud looks like a private seller until you notice that every year there's about 15 high priced guitars sold - clearly a stock room somewhere!
Private sellers wrap and take stuff to the PO because it needs to be done. A Business seller will expect to be paid for this simple task on top of the cost of  packing.  That's legitimate - it is a business expense.... if they are a bona-fide business!!

REPORTING THEM

If you think that a seller is cheating don't just report it to eBay who generally only act if there are a number of complaints about a member. Use the seller location to identify the most likely Trading Standards - they'll be under the local council.  As you'll only have the member's ID and location not the full name & address you'll need to point out that eBay must divulge this to Trading Standards. If you've actually bought from them and have a full identity all the better.
The more prosecutions there are, the better it will be for the honest traders.

GO EASY ON THE MISINFORMED

There are some charity sellers who think they need not register as businesses: they must but it is better to simply remind them of the fact.  They aren't defrauding anyone as they usually give excellent customer service and eBay remits their fees anyway.