diff --git a/.gitignore b/.gitignore
new file mode 100644
index 0000000..07ec73c
--- /dev/null
+++ b/.gitignore
@@ -0,0 +1,51 @@
+# Python
+__pycache__/
+*.py[cod]
+*$py.class
+*.so
+.Python
+build/
+develop-eggs/
+dist/
+downloads/
+eggs/
+.eggs/
+lib/
+lib64/
+parts/
+sdist/
+var/
+wheels/
+*.egg-info/
+.installed.cfg
+*.egg
+
+# Virtual Environment
+venv/
+env/
+ENV/
+
+# VS Code
+.vscode/
+.history
+
+# Logs
+logs/
+*.log
+
+# Local database
+storage/
+
+# Unit test / coverage reports
+htmlcov/
+.tox/
+.coverage
+.coverage.*
+.cache
+nosetests.xml
+coverage.xml
+*.cover
+.hypothesis/
+
+# Jupyter Notebook
+.ipynb_checkpoints
\ No newline at end of file
diff --git a/README.md b/README.md
index 22b7d38..911abb9 100644
--- a/README.md
+++ b/README.md
@@ -48,12 +48,19 @@ pip install -r requirements.txt
 
 ## Database Setup
 
+The application uses SQLite as the database. The database file will be created automatically in the following location:
+- In production: `/app/storage/db/db.sqlite`
+- In development: `./storage/db/db.sqlite` (relative to the project root)
+
 1. Run database migrations:
 
 ```bash
+# Make sure you're in the project root directory
 alembic upgrade head
 ```
 
+Note: If you encounter import errors with Alembic, make sure you're running the command from the project root directory so that the `app` module can be found.
+
 ## Running the Application
 
 Start the application with Uvicorn:
diff --git a/alembic.ini b/alembic.ini
index 612fb12..53a4565 100644
--- a/alembic.ini
+++ b/alembic.ini
@@ -35,7 +35,8 @@ script_location = alembic
 # are written from script.py.mako
 # output_encoding = utf-8
 
-sqlalchemy.url = sqlite:////app/storage/db/db.sqlite
+# The SQLAlchemy connection string will be dynamically set in env.py
+sqlalchemy.url = driver://user:pass@localhost/dbname
 
 [post_write_hooks]
 # post_write_hooks defines scripts or Python functions that are run
diff --git a/alembic/env.py b/alembic/env.py
index d297f64..d160e24 100644
--- a/alembic/env.py
+++ b/alembic/env.py
@@ -1,10 +1,18 @@
 from logging.config import fileConfig
+import os
+import sys
+from pathlib import Path
 
 from sqlalchemy import engine_from_config
 from sqlalchemy import pool
 
 from alembic import context
 
+# Append the parent directory to sys.path to allow imports from the app package
+# This is crucial for Alembic to find the app module
+BASE_DIR = Path(__file__).resolve().parent.parent
+sys.path.append(str(BASE_DIR))
+
 # this is the Alembic Config object, which provides
 # access to the values within the .ini file in use.
 config = context.config
@@ -13,10 +21,14 @@ config = context.config
 # This line sets up loggers basically.
 fileConfig(config.config_file_name)
 
-# add your model's MetaData object here
-# for 'autogenerate' support
-from app.database import Base
+# Import the database configuration
+from app.database import Base, SQLALCHEMY_DATABASE_URL
 from app.models.todo import Todo
+
+# Set the SQLAlchemy URL in Alembic configuration
+config.set_main_option("sqlalchemy.url", SQLALCHEMY_DATABASE_URL)
+
+# Set the target metadata
 target_metadata = Base.metadata
 
 # other values from the config, defined by the needs of env.py,
diff --git a/app/database/__init__.py b/app/database/__init__.py
index 9d66c3a..4c47a2e 100644
--- a/app/database/__init__.py
+++ b/app/database/__init__.py
@@ -1,10 +1,18 @@
+import os
 from pathlib import Path
 from sqlalchemy import create_engine
 from sqlalchemy.ext.declarative import declarative_base
 from sqlalchemy.orm import sessionmaker
 
 # Create database directory if it doesn't exist
-DB_DIR = Path("/app") / "storage" / "db"
+# Check if /app/storage is available, otherwise use a local directory
+if os.path.exists("/app"):
+    DB_DIR = Path("/app") / "storage" / "db"
+else:
+    # Fallback to a local directory for development
+    DB_DIR = Path(__file__).resolve().parent.parent.parent / "storage" / "db"
+
+# Ensure the directory exists
 DB_DIR.mkdir(parents=True, exist_ok=True)
 
 # Database URL