Protect both sides from WHAT?
The ATF does a trace forward, they show up at your door and you tell them you sold it to John Doe. End of story.
Again, protect from WHAT?
lawsuits will happen REGARDLESS of a bill of sale, especially if the person you sold the weapon to used it illegally, again regardless of a bill of sale.
In face, it shows that you DID sell it to a person, and did you do a background check? Let a lawyer get ahold of that one in court.
It protects against exactly nothing, and provides some false sense of safety from government prosecution or civil lawsuit.
Here's the ATF rule...
If you are an ACTIVE DUTY member of the armed forces, or NG assigned to active duty you can purchase a firearm in your home "state of residence" (the one you declare for tax purchases) OR in the state to which you have been assigned via PCS orders (permanent change of station)
if you are in transit, or TDY or TAD you cannot purchase in the state you are in.