--- title: "Understand Claude Code before you install it" description: "Learn the terminal basics, file-access limits, instruction files, and Claude.ai Projects comparison before choosing Claude Code for your work." canonical: "https://scalewithsearch.com/articles/what-is-claude-code" date: "2026-01-28" modified: "2026-10-02" --- ## Site navigation - [Scale With Search](https://scalewithsearch.com/) - Real estate - Real estate - [Real estate](https://scalewithsearch.com/for/real-estate) - Work - Start here - [Send your brief](https://scalewithsearch.com/work#send-your-brief) - [Prepare your six-question brief](https://scalewithsearch.com/work#prepare-your-six-question-brief) - Build - [Site build, content library with SEO, signal desk](https://scalewithsearch.com/work) - For your business - Trades and home services - [Auto body and collision shops](https://scalewithsearch.com/for/auto-body-and-collision-shops) - [Foundation and home repair contractors](https://scalewithsearch.com/for/foundation-and-home-repair) - 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[The Complete Small-Business Guide to AI Agent Governance](https://scalewithsearch.com/articles/ai-agent-governance-guide-small-business) - [The Complete Guide to Leaving Vendor AI Memory](https://scalewithsearch.com/articles/leaving-vendor-ai-memory-guide) - Articles by cluster - [Business memory](https://scalewithsearch.com/articles/business-memory-for-ai-agents-guide) - [Agent governance](https://scalewithsearch.com/articles/ai-agent-governance-guide-small-business) - [Migration and ownership](https://scalewithsearch.com/articles/leaving-vendor-ai-memory-guide) - For machines - [llms.txt](https://scalewithsearch.com/llms.txt) - [llms-full.txt](https://scalewithsearch.com/llms-full.txt) - [Machine view](https://scalewithsearch.com/?view=machine) - Company - Evidence - [Proof](https://scalewithsearch.com/proof) - Company - [About](https://scalewithsearch.com/about) # Understand Claude Code before you install it. On Monday you open Claude.ai and paste four paragraphs. They say what the business sells, who the clients are, how you want drafts written, and which project is due. Claude does good work with them. On Tuesday you paste the same four paragraphs again. Claude Code removes that step for work that lives in files. It is a command-line program from Anthropic. It runs in a terminal on your computer, works inside one project folder, and reads a file named `CLAUDE.md` from that folder when a session starts. The context you wrote once is present each time. This page explains what Claude Code is, how the terminal works, and how its file access differs from Claude.ai Projects. For recurring briefing, proposal, and content tasks, use [the business workflow guide](/articles/how-to-use-claude-code-for-business). Decide whether this product fits before building that workflow. ## Tell Claude Code and Claude.ai apart Anthropic ships two products with similar names. | Product | Where it runs | How it gets your context | |---|---|---| | Claude.ai | A browser tab, or the desktop and mobile apps | You paste text, upload files, or add files to a Project | | Claude Code | A terminal on your computer, started inside a project folder | It reads files in that folder, including `CLAUDE.md`, and asks before it changes files or runs commands | Both products send your messages to Anthropic's models for processing. The difference is where the context lives. In Claude.ai, context lives in the conversation, in a Project, or in the optional memory feature Anthropic added in 2025. All three live inside Anthropic's product. In Claude Code, context lives in files on your disk that you edit with any text editor. Anthropic has also released Claude Code for some code editors, a desktop app, and a web version. This page covers the terminal program. ## Learn the three commands a terminal needs A command-line interface (CLI) is a program that you control with typed commands in a terminal window. On a Mac, the terminal is the Terminal app. On Windows, it is PowerShell or Windows Terminal. You type a command and press Enter. The program runs. You do not need to be a developer. You need three commands: - `cd` moves you into a folder. - `ls` lists the files in that folder. On Windows, `dir` does the same. - `claude` starts a Claude Code session in the current folder. The session that opens can see the files in that folder and its subfolders. ## See how a session uses your files Claude Code does not build an index of your folder in advance. When a session starts, it loads `CLAUDE.md`. After that, it searches for and opens other files when a task needs them. The files stay on your disk. Claude Code sends the parts it reads to Anthropic's API as conversation context. It does not copy the folder into a separate cloud store. A session can work with these file types: - Markdown files, including `CLAUDE.md` - code files in any language - documentation and README files - plain-text data, such as CSV files In the Claude.ai chat, you must paste or upload each of those files yourself. ## Understand why the file acts as memory Claude Code reads `CLAUDE.md` at the start of every session. You write the file once and change it when the business changes. A typical file holds four kinds of context: - who you are and what the business does - how you want Claude to respond - current projects and priorities - terms, rules, and facts specific to your work Because the file is local, you control it. You edit it when a fact changes. You remove sensitive details when a project ends. You can put the folder under Git to keep a history of each change. The case for that format is in [why plain text is the durable layer for AI memory](/articles/plain-text-ai-memory). The file is not free. Its text uses part of the context window in every session. Keep `CLAUDE.md` short. Put long reference material in separate files that Claude Code opens when a task needs them. You can also point to another file from `CLAUDE.md` with an import line such as `@docs/pricing.md`. Claude Code reads more than one memory file. A file at `~/.claude/CLAUDE.md` applies to all your projects. A `CLAUDE.md` in the project folder applies to that project. A `CLAUDE.md` in a subfolder applies when Claude Code works in that subfolder. ## Use Claude Code for file work Claude Code reads, writes, and edits files in the project folder. You can ask it to do these tasks: - write code for a new feature - fix a bug in an existing file - write documentation from the code - restructure a script so that it is easier to read - draft a proposal from the notes in a client folder Claude Code makes the change in the file. Before it writes, it shows you the edit and asks for approval. You accept or reject each change. You can relax these prompts in the permission settings, but keep them on while you learn the tool. Because Claude Code can open any file in the project, it can follow the relations between files. For a new feature in a web app, a single request can make it do three things in order: 1. Read the existing code to learn the structure. 2. Change the HTML, CSS, and JavaScript files that the feature touches. 3. Update the documentation to match. ## Know the limits Claude Code is a file and terminal agent. It is not a calendar or email assistant. Five limits matter for most owners: - It needs a network connection. Each request goes to Anthropic's API. - It works inside the folder where you start it. Access to another folder needs your approval. - It runs a shell command only after you approve it, unless you allow that command in the settings. - It can fetch a web page or run a web search when you permit those tools. - It does not replace the chat app for a quick question that needs no files. For a one-off question, the Claude.ai chat is faster. For project work that needs the same context every day, Claude Code fits better. ## Compare Claude Code with other AI coding tools OpenAI now has a command-line agent too. In April 2025, OpenAI released Codex CLI, a terminal agent that reads an `AGENTS.md` file from the project. Other tools now read project instruction files too. | Tool | What it is | Where project instructions live | |---|---|---| | Claude Code | Terminal agent from Anthropic | `CLAUDE.md` files | | Codex CLI | Terminal agent from OpenAI | `AGENTS.md` files | | GitHub Copilot | Code completion, chat, and an agent mode inside editors | `.github/copilot-instructions.md` | | Cursor | Code editor built on VS Code with AI features | Project rules files | Claude Code works with any text editor, so you keep the editor you already use. Cursor replaces the editor. The [Claude Code and Cursor project memory comparison](/articles/claude-code-vs-cursor-project-memory) tests how each one carries context between sessions. ## Install Claude Code Before you start, you need a paid Claude plan or an Anthropic Console account with API billing. Plan names and prices change, so check Anthropic's pricing page. Setup takes about five minutes. 1. Open a terminal. 2. Copy the install command from Anthropic's Claude Code setup page. 3. Paste the command into the terminal and press Enter. 4. Move into a project folder, for example `cd ~/Documents/my-business`. 5. Type `claude` and press Enter. 6. Follow the sign-in prompt the first time. In 2025, the documented install command was `npm install -g @anthropic-ai/claude-code`, which needs Node.js. As of September 2026, the setup page recommends a native installer and still lists npm as an option. Use the command that the current setup page shows. ## Understand the instruction file before building it `CLAUDE.md` is a text file in the project folder, not a trained model. You can type `/init` to draft one from that folder's contents. Review the draft before keeping it. Instructions guide outputs; they do not replace tool permissions or a human check. For the full business file, bookkeeping example, and first repeated task, follow [the business workflow guide](/articles/how-to-use-claude-code-for-business). The [CLAUDE.md business template](/articles/claude-md-template-business-context) provides the fuller structure. Keep product choice here and put the operational setup in those guides. ## Choose between CLAUDE.md and Claude.ai Projects Claude.ai Projects let you add instructions and documents that Claude uses in every chat inside that Project. Projects live in Anthropic's cloud. You edit them through the web interface. With `CLAUDE.md`, you edit a text file on your computer in any editor. You can compare versions with Git and copy the file to another tool. A Claude Code session does not read a Claude.ai Project, so the terminal workflow needs a local file in any case. The [context file and CLAUDE.md comparison](/articles/context-file-vs-claude-md-business-project) explains when a business needs both. Size is another difference. ChatGPT custom instructions launched in 2023 with a limit of 1,500 characters per field, about one paragraph. As of September 2026, Claude Code loads a `CLAUDE.md` file of up to 4 MiB in full, and its documentation recommends fewer than 200 lines. Every line still costs context in each session, so size is a budget, not a free resource. ## Match the file to the work The same pattern fits different jobs. A developer keeps the tech stack, code conventions, and folder structure in `CLAUDE.md`. Claude Code then writes code that fits the project without a new explanation of React or Tailwind each time. A writer keeps character notes, the plot outline, and tone rules in the file. A request for a new chapter then uses the existing characters and stays consistent with the story. An operations manager keeps the org structure, current priorities, and standard procedures in the file. A request for a status report then names the right people and projects. ## Correct three common beliefs "You need to be a developer to use Claude Code." You need the three commands above and a folder of files. Owners who can use a web browser can learn them in one sitting. "It is only for code." It works on any text file. Writers, analysts, and project managers use it for drafts, documentation, data files, and plans. "The web interface is easier." For occasional use, it is. For daily work with the same context, a paste at the start of every chat costs more effort than a file that loads by itself. Data handling is the last question most owners ask. Your `CLAUDE.md` file stays on your disk, but the text that Claude Code reads during a session goes to Anthropic for processing. Retention and training terms depend on your plan. Check your account's data and training settings before you put client data in the folder. ## Decide whether you need it If you use AI once a week for unrelated questions, stay with the web interface. If you use AI every day on the same business, test Claude Code for one week. Pick one recurring task, write a `CLAUDE.md` file for it, and run the task in three fresh sessions. Count how often you still explain something by hand. Each explanation you repeat is a line that belongs in the file. ## Related: AI memory - [Choose between Claude Projects and Claude Code by where your files live](/articles/claude-projects-vs-claude-code) - [How to Search Claude Chat History Without Leaving the Finding Trapped in Claude](/articles/search-claude-chat-history-full-text) - [Install Claude Code and give it a CLAUDE.md it reads every session](/articles/claude-code-setup-guide) ---- ```text .|########||. .|########||. .|########||. |##||. .||##|. |##||. .||##|. |##||. .||##|. |#|. .|#|. |#|. .|#|. |#|. .|#|. |#| |#| |#| |#| |#| |#| .#| |#. .#| |#. .#| |#. .#. .#| .#. .#| .#. .#| |#. .#| |#. .#| |#. .#| |# ...... #| |# ...... #| |# ...... #| .# ||#########| #| .# ||#########| #| .# ||#########| #| .#. |######||######|. .#. .#. |######||######|. .#. .#. |######||######|. .#. #. .##|###|##|#|######| .# #. .##|###|##|#|######| .# #. .##|###|##|#|######| .# || |##|#||||||||||||#||#| || || |##|#||||||||||||#||#| || || |##|#||||||||||||#||#| || # |#||||||||||||||||||||#| #. # |#||||||||||||||||||||#| #. # |#||||||||||||||||||||#| #. || |#||||||||||||||||||||||#| || || |#||||||||||||||||||||||#| || || |#||||||||||||||||||||||#| || # .#||||||||||||||||||||||||#| # # .#||||||||||||||||||||||||#| # # .#||||||||||||||||||||||||#| # || ....|||#||||||##|#|||#|#||##||||....|. || || ....|||#||||||##|#|||#|#||##||||....|. || || ....|||#||||||##|#|||#|#||##||||....|. || #. . ....|# ....#||| ||| .#||| ....#. .# #. . ....|# ....#||| ||| .#||| ....#. .# #. . ....|# ....#||| ||| .#||| ....#. .# # . ||||#| .#####|| . .#| .#||| ||||# #. # . ||||#| .#####|| . .#| .#||| ||||# #. # . ||||#| .#####|| . .#| .#||| ||||# #. .| ||||| #. |#|||||. || #. |#||. .||||| || .| ||||| #. |#|||||. || #. |#||. .||||| || .| ||||| #. |#|||||. || #. |#||. .||||| || || |.... #. ....|#. |. ...|. ....|| || || |.... #. ....|#. |. ...|. ....|| || || |.... #. ....|#. |. ...|. ....|| || #. .||||||##||||||##||####|||||||#||||||#| .# #. .||||||##||||||##||####|||||||#||||||#| .# #. .||||||##||||||##||####|||||||#||||||#| .# # .||####|###########################|. # # .||####|###########################|. # # .||####|###########################|. # # .#||||||.#.|| # |. ..# #| #|||||#| # # .#||||||.#.|| # |. ..# #| #|||||#| # # .#||||||.#.|| # |. ..# #| #|||||#| # # .#|||||| .. |# ## |#| ...#|#|||#| # # .#|||||| .. |# ## |#| ...#|#|||#| # # .#|||||| .. |# ## |#| ...#|#|||#| # # .#|||#|# .# .#| #| ##|.#..#|||||#| # # .#|||#|# .# .#| #| ##|.#..#|||||#| # # .#|||#|# .# .#| #| ##|.#..#|||||#| # # .#||||||############|######|||||#| # # .#||||||############|######|||||#| # # .#||||||############|######|||||#| # # |...||#||||||#||||#|#||||||#|||||#||| |.| # # |...||#||||||#||||#|#||||||#|||||#||| |.| # # |...||#||||||#||||#|#||||||#|||||#||| |.| # #. .. ||||# .|||##|. |#| .|| || .|||#. #| # .# #. .. ||||# .|||##|. |#| .|| || .|||#. #| # .# #. .. ||||# .|||##|. |#| .|| || .|||#. #| # .# || | ...|| ...##| | #| .|. |. ##### .. .| || || | ...|| ...##| | #| .|. |. ##### .. .| || || | ...|| ...##| | #| .|. |. ##### .. .| || || ||||| || ||||#| . |. |. |#. ||||| |#| || || || ||||| || ||||#| . |. |. |#. ||||| |#| || || || ||||| || ||||#| . |. |. |#. ||||| |#| || || .# |.....#|....|#.||||.|||##.|#|....||.#||.#. #. .# |.....#|....|#.||||.|||##.|#|....||.#||.#. #. .# |.....#|....|#.||||.|||##.|#|....||.#||.#. #. #.|||||||#############################| ||| .# #.|||||||#############################| ||| .# #.|||||||#############################| ||| .# || ##||#||#||||||#||#||#||#||##. || || ##||#||#||||||#||#||#||#||##. || || ##||#||#||||||#||#||#||#||##. || # .#|||||||||#||#|||||||||||#| # # .#|||||||||#||#|||||||||||#| # # .#|||||||||#||#|||||||||||#| # || |#||||||||||||||||||||||#| || || |#||||||||||||||||||||||#| || || |#||||||||||||||||||||||#| || .# |#||||||||||||||||||||#| #. .# |#||||||||||||||||||||#| #. .# |#||||||||||||||||||||#| #. || |#||||||||||||||||||#| || || |#||||||||||||||||||#| || || |#||||||||||||||||||#| || #. .######|#|#########| .# #. .######|#|#########| .# #. .######|#|#########| .# .#. |#####||||#####| .#. .#. |#####||||#####| .#. .#. |#####||||#####| .#. |# ||########|| #. |# ||########|| #. |# ||########|| #. |# ...... #| |# ...... #| |# ...... #| |#. .#| |#. .#| |#. .#| |#. .#. |#. .#. |#. .#. .#| |#. .#| |#. .#| |#. |#| |#| |#| |#| |#| |#| .|#|. .|#|. .|#|. .|#|. .|#|. .|#|. |##||. .||##| |##||. .||##| |##||. .||##| .||########||. .||########||. .||########||. Scale With Search 2026 [scalewithsearch.com](https://scalewithsearch.com) ```