General Settings
First of all, it should be determined which percentage of commission will be taken by the instructor. You can do it in MS LMS -> LMS Settings -> General.
Note. PayPal Fee will be withdrawn from the admin's account.

It is required to Enable the PayPal Payment method from the LMS Settings and make it Default.
To do this, go to MS LMS -> LMS Settings.
Click on the Payout section and in opened tab click on the Enable payment method button.
Then click on Make Default.

The PayPal account time zone should be the same as the website time zone.
You can change the time zone in Settings -> General.

The website should be with an SSL certificate. The site link should look like https://sitename.domain.

Build-in payment methods should be enabled since Payouts only works with LMS orders. To do this, you should go to LMS Settings -> Payment Methods.
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PayPal Settings
Time Zone Setting
SSL Certificate
Enabling Payment Methods