My living room layout is very similar! I had my couch horizontal in front of your window creating a entryway, maybe put a console table behind the couch.

Consider a grouping of four swivel chairs in front of the fireplace and a pair of upholstered benches at the two windows; game area in the corner if your bunch enjoy that kind of family time. I see a chain hanging from the ceiling which reminds me to ask about lighting. What kind of fixture lights the stairwell? If you ever want to add TV, consider enclosing the stairs with a pony wall pre-wired for TV on living side and for a pair of sconces on the stairs side. Here are some fun and comfy looking chairs. These are a bit more traditional; what's your style? One take on the pony wall idea.

What style is the exterior of the home? Will you continue with that vibe? The front door looks to be a country cottage style. What size is your family? How many do you need to seat comfortably at one time? If you think you could use two seating areas, consider how you might divide the space with a diagonal line between the two sets of steps. The area left of the line could be for a library/game table section and the other side a sitting area. Think about removing the railing and installing wider steps and a pony wall to prevent falls off the upper level and to serve as added wall space for the sitting area below. That corner might make a nice reading nook with a comfy chair and lamp. Looks like there's already an electrical outlet beside the fireplace on that side.

The tv should move to the opposite end wall…having the tv cabinet (or a fireplace) on that wall is too close to the entry way. Then the sofa along the windows and the double recliner facing the tv with an end table/lamp in the corner between them. The entry way will be unobstructed and separated from the seating area. And the living room seating will be open to the kitchen.