Should an Alberta child care center be for-profit, a society or a Section 9 company?

In ChildFriendly Pro's June 2025 Lunch & Learn, child care operator and financial advisor Ray P. Lewchuk of Blue Chip Wealth explained that after Alberta's May 15 for-profit space cap, a Section 9 non-profit company (minimum two directors, owner keeps board control, compensation by salary only) sits between a for-profit corporation and a society, where the founder holds one vote on a board of at least three, mostly parents.

What the session covered

According to host Krystal Churcher, Alberta announced a cap on for-profit child care spaces on May 15, 2025, and guest Lewchuk said new for-profit spaces could no longer receive Affordability Grant funding. Operators who had planned or were building for-profit centers began considering a non-profit structure instead. This Director Lunch & Learn compared three legal entity options available in Alberta: a for-profit corporation, a society, and a Section 9 company, which Lewchuk described as similar to a private corporation except that it is non-profit. Lewchuk, an Association of Child Care Entrepreneurs board member who owns one for-profit and one non-profit child care operation and advises businesses through Blue Chip Wealth, described how each structure handles control, profit distribution, taxation, grant eligibility, sale and borrowing. Churcher added that the federal-provincial CWELCC agreement in Alberta expired in March and that a separate cap applied to non-profit spaces, so restructuring decisions depended on timelines and funding availability that were not yet known at the time of the session.

How do for-profit corporations, societies and Section 9 companies differ in control and compensation?

Lewchuk explained that in a for-profit corporation, shareholders own the company and may distribute profits without restriction as dividends, salaries or bonuses. He said retained profits are taxed, usually at the small business rate, grants are more limited, and the owner may sell the business at market value as a going concern or as an asset sale. He called it the strongest option for owners seeking a return on investment. According to Lewchuk, a society requires a board of at least three people, with three to seven recommended, and members are typically parents; the founder may chair the board but has one vote, which he described as giving up full control. A Section 9 company, he said, needs at least two directors, who may be related, such as spouses, siblings or a parent and child, so the founder keeps control of governance. Neither non-profit form may pay dividends; owners are paid through salary, which he said makes little after-tax difference except for Canada Pension Plan contributions. Both can own assets and give directors limited liability; he recommended directors' insurance.

What does it cost and take to set up a Section 9 non-profit company in Alberta?

Lewchuk said a Section 9 company can be self-registered, but annual filings for financial statements, the annual general meeting and board minutes make a lawyer familiar with Section 9 worthwhile. He estimated registration at over $1,000, with annual charges of about $200 to $300, and advised preparing as much as possible beforehand to reduce bylaw drafting costs. The steps he listed were: clarify the company's purpose, choose a name and complete a name search, form a board and select directors, prepare a memorandum and articles of association, file incorporation with the Alberta registry, receive the certificate, set up corporate records, policies and bylaws, and register with the Canada Revenue Agency. He called charitable status optional and not worth the administration unless a center plans significant fundraising. He said bylaws must state where assets go if the company winds up, either to government or another non-profit. He said a for-profit shelf company can be ready in a day or two, but a Section 9 registration can take months; he advised changing lawyers if one is unfamiliar with it.

Can a non-profit child care center later convert to for-profit, borrow money or pay management fees?

Lewchuk said a non-profit cannot be converted to a for-profit corporation. A for-profit could buy a non-profit's assets, but the sale must be at market price, proceeds must go to a permitted recipient, leaseholds usually have little value, and the buyer would need a new licence, because a licence cannot be transferred from a non-profit to a for-profit. Shares in a Section 9 company can be sold, giving a buyer the right to draw salaries, but a society has no shares to sell. On funding, he advised founders to inject personal money as a shareholder or director loan rather than a donation, so it can be repaid tax-free. He said banks are reluctant to lend to societies because directors are unlikely to give personal guarantees; a Section 9 owner can give one, making borrowing similar to a for-profit. He said management fees charged to a non-profit carry 5% GST that a child care operator with GST-exempt revenue cannot recover. He also noted a non-profit pays no tax on surplus, so in his example $100,000 stays $100,000 rather than about $88,000.

Child care legal structure comparison and Section 9 setup steps from the session

How ChildFriendly Pro automates this

Churcher noted that any structure brings bookkeeping, CRA and funding-claim obligations that operators often track manually. ChildFriendly Pro handles billing with subsidy split-billing and keeps funding claims and supplementary fee records in its tracking and audit-export reports, which Churcher highlighted at 19:06; no product demo was shown.

Next steps

• Register for the next Director Lunch & Learn on child care operations
• Automation, tracking and reports for licensing logs and audit exports
• Alberta child care software for Affordability Grant and CWELCC billing
• Book a demo of ChildFriendly Pro for Alberta operators

Official sources

• Government of Alberta: Incorporate a non-profit
• Companies Act (Alberta)
• Canada Revenue Agency: Charities and giving