You'll need to set tests accounts through https://developer.paypal.com/ (signup required, separate from your Live PayPal account).
In here, create one buyer/seller account. Change the "action" for your to point to https://www.sandbox.paypal.com/cgi-bin/webscr, as opposed to https://www.paypal.com/cgi-bin/webscr
Don't forget to modify 'business' of your button to match the Sandbox seller account you just created.