diff --git a/DATA_DEPLOYMENT.md b/DATA_DEPLOYMENT.md
new file mode 100644
index 0000000..561f97e
--- /dev/null
+++ b/DATA_DEPLOYMENT.md
@@ -0,0 +1,75 @@
+# Data Folder Deployment Guide
+
+## Overview
+
+The `./data` folder is the **persistent data storage** for the DigiServer deployment. It is **NOT committed to the repository** but contains all necessary files copied from the repo during deployment.
+
+## Structure
+
+```
+data/
+├── app/                  # Complete application code (copied from ./app)
+├── Caddyfile            # Reverse proxy configuration (copied from root)
+├── instance/            # Flask instance folder (database, configs)
+├── uploads/             # User file uploads
+├── caddy-data/          # Caddy SSL certificates and cache
+└── caddy-config/        # Caddy configuration data
+```
+
+## Deployment Process
+
+### Step 1: Initialize Data Folder
+
+Run this script to copy all necessary files from the repository to `./data`:
+
+```bash
+./init-data.sh
+```
+
+This will:
+- Create the `./data` directory structure
+- Copy `./app` folder to `./data/app`
+- Copy `Caddyfile` to `./data/Caddyfile`
+- Set proper permissions for all files and folders
+
+### Step 2: Start Docker Containers
+
+```bash
+docker-compose up -d --build
+```
+
+### Step 3: Run Migrations (First Time Only)
+
+```bash
+sudo bash deploy.sh
+```
+
+## Important Notes
+
+- **./data is NOT in git**: The `./data` folder is listed in `.gitignore` and will not be committed
+- **All persistent data here**: Database files, uploads, certificates, and configurations are stored in `./data`
+- **Easy backups**: To backup the entire deployment, backup the `./data` folder
+- **Easy troubleshooting**: Check the `./data` folder to verify all required files are present
+- **Updates**: When you pull new changes, run `./init-data.sh` to update app files in `./data`
+
+## Deployment Checklist
+
+✓ All volumes in docker-compose.yml point to `./data`
+✓ `./data` folder contains: app/, Caddyfile, instance/, uploads/, caddy-data/, caddy-config/
+✓ Files are copied from repository to `./data` via init-data.sh
+✓ Permissions are correctly set for Docker container user
+
+## Verification
+
+Before starting:
+```bash
+ls -la data/
+# Should show: app/, Caddyfile, instance/, uploads/, caddy-data/, caddy-config/
+```
+
+After deployment check data folder for:
+```bash
+data/instance/*.db           # Database files
+data/uploads/                # User uploads
+data/caddy-data/*.pem        # SSL certificates
+```
diff --git a/Dockerfile b/Dockerfile
index 51309f9..1c855f0 100755
--- a/Dockerfile
+++ b/Dockerfile
@@ -31,9 +31,6 @@ COPY . .
 COPY docker-entrypoint.sh /docker-entrypoint.sh
 RUN chmod +x /docker-entrypoint.sh
 
-# Create directories for uploads and database
-RUN mkdir -p app/static/uploads instance
-
 # Set environment variables
 ENV FLASK_APP=app.app:create_app
 ENV PYTHONUNBUFFERED=1
diff --git a/docker-compose.yml b/docker-compose.yml
index 29d6a50..2cf2076 100755
--- a/docker-compose.yml
+++ b/docker-compose.yml
@@ -8,9 +8,9 @@ services:
     expose:
       - "5000"
     volumes:
-      - ./instance:/app/instance
-      - ./app/static/uploads:/app/app/static/uploads
-      - ./Caddyfile:/app/Caddyfile
+      - ./data/app:/app
+      - ./data/instance:/app/instance
+      - ./data/uploads:/app/app/static/uploads
     environment:
       - FLASK_ENV=production
       - SECRET_KEY=${SECRET_KEY:-your-secret-key-change-this}
@@ -36,9 +36,9 @@ services:
       - "443:443/udp"  # HTTP/3 support
       - "2019:2019"     # Caddy admin API
     volumes:
-      - ./Caddyfile:/etc/caddy/Caddyfile:ro
-      - caddy-data:/data
-      - caddy-config:/config
+      - ./data/Caddyfile:/etc/caddy/Caddyfile:ro
+      - ./data/caddy-data:/data
+      - ./data/caddy-config:/config
     environment:
       - DOMAIN=${DOMAIN:-localhost}
       - EMAIL=${EMAIL:-admin@localhost}
@@ -52,7 +52,3 @@ services:
 networks:
   digiserver-network:
     driver: bridge
-
-volumes:
-  caddy-data:
-  caddy-config:
diff --git a/init-data.sh b/init-data.sh
new file mode 100755
index 0000000..77db50c
--- /dev/null
+++ b/init-data.sh
@@ -0,0 +1,25 @@
+#!/bin/bash
+# Initialize ./data folder with all necessary files for deployment
+
+set -e
+
+echo "🔧 Initializing data folder..."
+mkdir -p data/{app,instance,uploads,caddy-data,caddy-config}
+
+echo "📁 Copying app folder..."
+rm -rf data/app
+cp -r app data/
+
+echo "📋 Copying Caddyfile..."
+cp Caddyfile data/
+
+echo "🔐 Setting permissions..."
+chmod 755 data/{app,instance,uploads,caddy-data,caddy-config}
+chmod 644 data/Caddyfile
+chmod -R 755 data/app/
+find data/app -type f \( -name "*.py" -o -name "*.html" -o -name "*.css" -o -name "*.js" \) -exec chmod 644 {} \;
+chmod 777 data/instance data/uploads
+
+echo "✅ Data folder initialized successfully!"
+echo "📊 Data folder contents:"
+du -sh data/*/