I am working on a website in which a user can sign in and upload a file and other users can search for it by name and download it. Those files will be catagorized as audio, video, apps(linux, windows, mac), documents etc. So, I was wondering if it is legal or illegal. I'll also add a "report" option with each file by which visitors can report a pirated content.
There are a number of existing legal sites that do this, for free or for pay. The main concern for a website operator pertains to the DMCA "safe harbor" provisions, which protect against vicarious liability for infringement. A "report piracy" option is not sufficient; see this answer to a related question.