diff --git a/.gitignore b/.gitignore
index a157914..de65490 100644
--- a/.gitignore
+++ b/.gitignore
@@ -96,6 +96,8 @@ ehthumbs.db
 Thumbs.db
 
 # Data files - NEVER commit sensitive business data
+data/
+!data/README.md
 *.csv
 *.xlsx
 *.xls
diff --git a/data/README.md b/data/README.md
new file mode 100644
index 0000000..6d55d2f
--- /dev/null
+++ b/data/README.md
@@ -0,0 +1,49 @@
+# Data Directory
+
+This directory is for your local business data files and is **excluded from git** for security.
+
+## Supported File Types
+
+### CSV Import Files
+- Etsy transaction statements (`etsy_statement_YYYY_MM.csv`)
+- Transaction summaries (`TransactionSummary_YYYYMMDD_YYYYMMDD.csv`)
+- Custom order exports
+
+### PDF Documents
+- Etsy receipts and invoices
+- Shipping labels
+- Business documents
+
+### Excel/Spreadsheet Files
+- Business tracking spreadsheets
+- Financial analysis workbooks
+- Inventory tracking files
+
+## File Organization (Recommended)
+
+```
+data/
+├── csv/
+│   ├── etsy-statements/
+│   ├── transactions/
+│   └── exports/
+├── pdf/
+│   ├── receipts/
+│   ├── invoices/
+│   └── shipping/
+└── spreadsheets/
+    ├── business-tracker.xlsx
+    ├── monthly-reports/
+    └── analysis/
+```
+
+## Security Note
+
+**Important**: This folder is automatically ignored by git to protect your sensitive business and customer data from being accidentally committed to the public repository.
+
+Never commit files containing:
+- Customer personal information
+- Financial transaction details
+- Business revenue data
+- Tax information
+- Vendor details
\ No newline at end of file