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A firearm bill of sale documents the sale of handguns, rifles, or shotguns between private buyers and sellers, facilitating the transfer of ownership and protecting both parties in legal matters. The video outlines essential details about firearm bill of sale forms and where to obtain an official template for free. It emphasizes that gun laws vary by state and provides six best practice steps for selling a firearm: research your state's laws and requirements, consider selling to a trusted individual, perform a background check if necessary, negotiate sale terms, and create a bill of sale.