The Short Answer

Stessa alone cannot support a partnership return. A Form 1065 needs balance sheet figures and partner capital accounts, and Stessa is a single-entry system that does not produce them. Portfolios that file a 1065 need double-entry books, commonly QuickBooks Online or REI Hub, with Stessa optionally kept for metrics.

What does a partnership return actually need?

When an LLC with two or more members files as a partnership, the return is Form 1065, and it asks for more than income and expenses. The preparer needs:

  • A balance sheet (Schedule L): assets, liabilities, and equity at the start and end of the year, with loan balances that tie to lender statements.
  • Partner capital accounts: each partner’s contributions, share of income, and distributions, tracked continuously, feeding the K-1s and the capital reconciliation.
  • Books that tie out, meaning the income statement and balance sheet reconcile to each other, which is precisely what double-entry bookkeeping guarantees.

Exactly which schedules apply to your entity and year is your CPA’s call. What is not negotiable is that the preparer needs those numbers from somewhere.

Where does Stessa stop?

Stessa is single-entry by design. It records money in and money out, categorized and tagged by property, which is a complete picture for a Schedule E filer. It does not maintain a general ledger where every transaction has two sides, so it cannot produce a balance sheet that ties out, and it has no concept of partner capital accounts at all.

“Single-entry answers what happened to the cash. A partnership return also asks who owns what as a result. That second question needs double-entry books.”

The gap shows up in January: a preparer handed Stessa reports for a 1065 either sends the books back or reconstructs the balance sheet by hand at their hourly rate, every year.

What are the practical options?

  1. QuickBooks Online. The general-purpose answer: true double-entry, per-property tracking via classes, and every CPA knows it. Cost is a subscription per entity, and the chart of accounts needs shaping for real estate.
  2. REI Hub. Real-estate-specific double-entry software: balance sheet capability with a landlord-shaped chart of accounts out of the box. A middle path worth evaluating when QuickBooks feels like more machine than the portfolio needs.
  3. Stessa plus a CPA reconstruction. Technically possible, quietly expensive. Paying a preparer to rebuild a balance sheet annually usually costs more than a year of software, and it is rebuilt from inference rather than maintained from transactions.
Timing

Switch at a year boundary

Move to double-entry books on January 1 with clean opening balances, including accurate loan balances and each partner’s capital to date. Setting those opening figures is joint work for your bookkeeper and CPA, and it is far cheaper to do once, at the boundary, than to reconstruct mid-year.

Can I keep using Stessa anyway?

Yes. Plenty of investors keep Stessa for what it is genuinely good at, per-door dashboards, document storage, and quick metrics, while the double-entry system holds the books of record. The one rule that makes this work: when the two disagree, the books of record win, and the K-1 conversation happens from those books only.

The Bottom Line

If your entity files a 1065, single-entry bookkeeping is not enough, and that is a structural fact rather than a Stessa flaw. Get double-entry books in place at the next year boundary, bring your CPA into the opening-balance setup, and keep Stessa in the picture only for the jobs it does best.

Frequently asked questions

What is the difference between single-entry and double-entry bookkeeping?

Single-entry records each transaction once, as money in or money out, like a checkbook register. Double-entry records both sides of every transaction, which is what keeps an income statement and balance sheet tied to each other. A P&L can come from either; a balance sheet that ties out can only come from double-entry.

My LLC has two members. Do I automatically file a 1065?

Often, but not always; a married couple in a community property state, or an LLC electing a different tax treatment, can change the answer. That determination belongs to your CPA. What we handle is the consequence: once a 1065 is the filing, the books behind it need to be double-entry.

Is REI Hub or QuickBooks better for a partnership?

Both can support a 1065, because both are true double-entry systems. REI Hub arrives pre-shaped for rentals with a landlord chart of accounts; QuickBooks is more powerful and more universal among CPAs but needs configuration for real estate. Portfolio complexity and your preparer’s preference usually decide it.

TL

Tom Latuga

Founder, Real Cents Organized

Tom is a real estate investor, Intuit Trained Bookkeeper, and founder of Real Cents Organized. He helps landlords and real estate investors across the United States transform messy books into tax-ready clarity.

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