What type of paypal payment are you doing? Paypal standard buttons? Shopping cart with express checkout? Paypal payments pro? Paypal payflow pro? It really depends on what you are doing.
Lots of times it is easier to make them register first, just mark the record as "unpaid" and then just update that field to paid after payment that way you can track the user through payment since they have already registered and logged in.
That is probably the most common technique anyway. but really anything is possible.