Do we need H1-B visa, if you’re physically present in Canada with Canadian PR and work for US employer
no
do you know how does this work? what should be the setup? independent contractor OR sole proprietor
Check out Introducing MOV Remote - Work Remotely for Silicon Valley companies - #10 by ashwin or vanhack.com - both are designed to help you do this. You’d turn into a Canadian employee of a company that itself is an independent contractor for your US employer.