I wanted to start a US business - despite being based in the UK - because the US is where most of my target market is (besides suppliers). I've read on PayPal's site (https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&content_ID=marketing_us/IRS6050W) that an SSN is required for all payment processers in the US.
Does this effectively rule out my plan? Can a non-US person not sell in the US because of this?
Your mixing up two different things here and getting in a mess.
a) Payment processing
b) Selling to other countries.
For a) Just about any payment processor can accept payments worldwide (though many add an extra 'cross border' fee) - so for example there is nothing stopping you setting up a paypal account in the UK but taking payments from the US. If you setup a UK based paypal account they won't want your SSN (they may ask for your UK equivalent).
For b) Selling to other countries can be a bit of a minefield - but if you're selling digital goods and if you are selling as an organisation (e.g. you've setup a Ltd. company) rather than as an individual then you're all set, there is no need to setup a US company or apply for SSN/EIN. For the specific UK to US case :-
Many US company's will ask you (mistakenly) for a W9 form - which is all about either proving your a US company or taxing you at source if you're a US employee. Instead you need to send them a W8-BEN that effectively says "I am not a foreign organisation, give me the cash wihtout taking a withholding tax off the top".
EDIT - I am fed up of trying to steer US purchasing departments through the impenetrable IRS documentation on this subject so have just gone and got a damn EIN so now the form 'looks filled in' and passed through admin. Didn't have to but its just easier...
Does this effectively rule out my plan? Can a non-US person not sell in the US because of this?No, this won't rule out your plan. There's a lot involved in starting a company in the U.S. (the form of the company, what State you operate in, etc.). But I'll restrict this answer to the new tax filing requirements of PayPal. You can either use an SSN or an EIN number. An EIN number is much easier to get.
Here are the appropriate links:
But this answer is right about needing an EIN, SSN (or the unmentioned equivalent of an SSN the TIN). That is, there's a new law for payment processors that are based in the United States and they require this tax ID whether you're from the U.S. or not. It just came into effect in the last several months.
In fact, PayPal says as much :
Are non-US PayPal accounts affected by this new law? Internal Revenue Code Section 6050W requires PayPal’s non-US subsidiaries to comply with the new law. As a result, non-US account holders may need to certify their non-US status and their address. US sellers using a non-US PayPal account may be required to provide a tax ID number (Social Security Number (SSN), Employer Identification Number (EIN), or Individual Tax Identification Number (ITIN)) for those accounts. We will provide additional guidance on these requirements when available.But, I suppose the commentors on this answer were right about the "forming a U.S. company" bit of my original answer. You don't need to form a company.
You do, however, need a U.S. tax id (SSN, EIN, or ITIN) if you're going to use a U.S. based payment processor.