diff --git a/README.md b/README.md
index b0217c3..93ebded 100644
--- a/README.md
+++ b/README.md
@@ -46,7 +46,13 @@ issue `#5` (CRUD API implementation).
 
 ```bash
 python -m venv .venv
+
+# macOS/Linux/Git Bash
 source .venv/bin/activate
+
+# Windows PowerShell
+.\.venv\Scripts\activate
+
 pip install -r backend/requirements.txt
 ```
 
@@ -120,9 +126,16 @@ institutional context.
 4. Write tests and run `pytest backend/tests` before opening a pull request.
 5. Document behaviour changes in code docstrings or the project docs.
 
+## Backend Setup and .env Guidance
+
+For a step-by-step setup including environment variable handling, see:
+[`docs/backend-setup.md`](docs/backend-setup.md)
+
 ## License
 
-MIT, Apache
+This project is distributed under the **MIT License**.
+If additional licenses are introduced for specific subcomponents, they should be
+declared explicitly with scope and rationale.
 
 ## Maintainers
 
diff --git a/docs/backend-setup.md b/docs/backend-setup.md
new file mode 100644
index 0000000..7ba1c9d
--- /dev/null
+++ b/docs/backend-setup.md
@@ -0,0 +1,67 @@
+# Backend Setup Guide (.env and Local Run)
+
+This guide explains how to configure and run the backend service consistently.
+
+## 1. Prerequisites
+
+- Python 3.11+
+- `pip`
+- Access to project repository
+
+## 2. Create and Activate Virtual Environment
+
+```bash
+python -m venv .venv
+
+# macOS/Linux/Git Bash
+source .venv/bin/activate
+
+# Windows PowerShell
+.\.venv\Scripts\activate
+```
+
+## 3. Install Dependencies
+
+```bash
+pip install -r backend/requirements.txt
+```
+
+## 4. Configure Environment Variables
+
+Create a `.env` file in the backend runtime context and define required values.
+Use safe defaults for local development and never commit production secrets.
+
+Recommended minimum variables:
+
+```env
+ENV=development
+DEBUG=true
+DATABASE_URL=sqlite:///./lifeline.db
+SECRET_KEY=change-me-in-real-environments
+```
+
+If your deployment uses different settings (PostgreSQL, external services), override these values accordingly.
+
+## 5. Run API
+
+```bash
+uvicorn backend.app.main:app --reload
+```
+
+## 6. Verify Setup
+
+1. Open API docs at `http://127.0.0.1:8000/docs`
+2. Call a basic endpoint to confirm service health.
+3. Run tests:
+
+```bash
+pytest backend/tests
+```
+
+## 7. Common Pitfalls
+
+- Missing virtual environment activation
+- Missing/incorrect `.env` values
+- Dependency version drift between environments
+
+Use this checklist before opening pull requests that affect backend behavior.