While testing my client's shop I noticed that if you select paypal on checkout for payment it goes to paypal but when you return the cart is empty.
Is there a setting i'm missing?

This is by design albeit not the most elegant.

Because PayPal is an 'offsite' form of payment, Able must convert the basket to an order prior to sending the browser to PayPal's website. This guarantees the state of the order by the time PayPal notifies the Able site that the payment was processed successfully.

Technically the shopper does not have to complete the PayPal process right away. They can return later and apply the payment. So Able needs to have an (unchanged) order standing by to receive the payment at a later time or date.

And also technically, the shopper could leave PayPal open, start a new tab, return to the Able site and alter the basket contents. Then switch back to complete the PayPal payment in the first tab. If Able didn't create the order until the payment was received from PayPal, you could easily get orders with $ 5,000 of stuff on it but the PayPal payment was only $ 150.

Ideally the basket should be set aside internally within the store. The shopper could continue shopping with a fresh empty basket while the paypal payment is processed. Yet the original basket is preserved for when the paypal payment notification is transmitted to the Able store. Unfortunately this is not how it is designed in Able.

Other 'onsite' payment gateways such as Authorize.Net do not have such a requirement as they can process the payment request in realtime with the payment gateway. This gives the Able store the ability to immediately know if the order should be created, or if the shopper should remain on the payment page to try again.

I'm curious what the exact issue is at that point in checkout flow?