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A firearm bill of sale is a document that records the details of a private sale of a handgun, rifle, or shotgun, ensuring the transfer of ownership and providing protection for both the buyer and seller in case of legal issues. The video outlines essential information regarding firearm bill of sale forms and how to obtain an official template for free. It emphasizes that the process for selling firearms varies by state due to differing gun laws. However, there are six best practice steps to follow: research your state's gun laws and sale requirements, consider selling to a trusted individual, perform a background check as required or optional per state law, negotiate sale terms, and create a bill of sale.