Time-out is a discipline strategy in which a child is immediately removed from an activity for inappropriate behavior and asked to sit alone quietly to think about his actions for a specified time.  The goal is to remove the attention from the child’s inappropriate action and not reinforce that misbehavior (which could increase its frequency until it becomes a bad habit).  It also gives both the child and the parent a chance to cool down and reduce angry outbursts.  For some kids, time-out is an unendurable century, and for others it’s no “fun” but not a big deal.  Here are general tips for using time-out so that you are more likely to reap the desired behavior change:
Target the “right” behaviors for the right kid.  Time-out is most effective in reducing such behaviors as hitting, biting, name-calling, whining, interrupting, or defiance in which the child directly disobeys an adult.  The time-out should always be directly correlated to the behavior that causes it.  (If he hits, he gets a time-out.)  It’s most effective for kids three to ten, and is rarely effective for children younger than two.  Time-out is not useful for children whose only problem behavior is excessive sulking or crying.  Something else may be triggering the behavior and you need to look into the real cause (which you should do no matter what).
Find a quiet, safe, well-lit part of the house.  Set aside an appropriate chair (no beanbag or recliner).  Some parents call the location the “Cool Down Corner” or the “Thinking Chair.”  Make sure the area is one where the child is isolated; he should be unable to receive attention from others and have no access to distractions, such as games, toys, iPods, computers, pets, food, TV, friends, or phones.  The spot should be out of general household traffic, but you can still listen to make sure he is safe.
Set an appropriate time.  The simplest rule for determining the time length is one minute for each year of the child’s age (three years equals three minutes, and so on).  Remember that these are the minimum times.  Do not let your kid out earlier.  The length of the time-out depends on the severity of the infraction and your child’s age.
Be clear on the time.  Always tell your child exactly how long he is required to remain in time-out.  Set a timer with a bell (placed near you so you maintain control-never give it to the child) so that you and the child know exactly when the time is up.  Don’t shave time off the time-out period once you announce the length.  The clock starts as soon as your kid stops resisting and begins the time-out properly.  Keep in mind that time-out need not be lengthy – usually a few minutes, and ten minutes at most is effective.  You must be calm and matter-of-fact when you administer time-out.
Enforce it.  The child is not allowed to leave time-out until he behaves appropriately: sitting quietly to the best of his ability and remaining for the stipulated time.  If he doesn’t comply, add an extra minute of time-out from the moment he acts right.  The American Academy of Pediatrics stresses that you should not drag or pull the child to the time-out spot.  Not only could you or your child get hurt, but the time-out will be ineffective.  Do praise your child for complying with your request and for sitting quietly.  “Thank you for going to time-out.”
Ignore your child.  Don’t peek in or respond to any attempts for attention.  Keep in mind that one point of time-out is to remove the child from receiving any attention – whether positive or negative.  Any interaction with your child will only reinforce whatever misbehavior he is displaying.  This is the time for your child to think for himself and calm down.  It is also critical that you remain calm.  No long lectures.  No yelling.  In fact, no talking.  One benefit of time-out is that it gives both the child and parent the opportunity to calm down.  The single biggest parenting mistake is to talking to the child during time-out.  Ignore, ignore, ignore.
Use time-out anyplace and anytime.  Implement time-out anywhere your child displays the inappropriate behavior the minute the child misbehaves (or as soon as convenient):  “You are hitting; go sit on Grandma’s bed for ten minutes.”  Following the time-out, the child must still complete what you ask him to do (such as the chore or homework task).  If he still doesn’t comply, then double the time-out length and stay firm.
Do a quick debriefing.  A crucial part of discipline is helping your kid learn what he did wrong so that he won’t be as likely to repeat the same misbehavior.  So when time-out has been served, ask your child to describe what he did wrong and what he will do differently next time.  With younger children or those who have difficulty remembering, you will need to guide them with their answers.  One of the biggest reasons kids continue using the same misbehavior is that they don’t know another way to behave.  Make sure you are clear about how you want your child to behave and that your child knows how to act in the way you are expecting.  Make no assumptions: take time to role-play the “right way” with your child and then expect him to apologize for hurtful acts.
Remove a privilege if he refuses time-out.  If your child does not comply with your request to go to time-out or won’t calm down, then tell him you are adding a minute more time to his time-out (from three to four minutes, and so on).  You may up the time twice, but if your child still does not comply, then stop the time-out.  The child now loses a privilege or the use of something he really cares about for a specified time period – an hour for little tykes and twenty-four hours for bigger kids.  Simply state the consequence: “You didn’t comply with time-out, so there’s no television for the day.”  Then turn and walk away.  Don’t lecture.  Just walk away.  Make sure the possession or privilege is something you personally can control, such as use of the phone, computer, skateboard, video games, or TV.  You should not drag or forcefully pull your child to time-out.  Instead, remove a privilege if your child does not comply with your request.
You should see a gradual diminishment of the inappropriate behavior.  Sometimes it is common for the misbehavior to slightly increase.  If this happens, it means that your child is testing you to make sure you mean what you say.  So be consistent.  Do know that implementing time-outs successfully may take some practice, so hang in there.  You should also track on a calendar how often you are using time-out to make sure there is a decrease.  If you consistently use time-out according to these rules for a few weeks and see no improvement, or if the child refuses the time-outs or is physically damaging the room, seek the help of a behavior therapist, counselor, or psychologist.  Something else may be triggering your child’s misbehavior.  Are there any new stresses or changes that might be affecting you or your child?  Are you really implementing time-out correctly?
Chapter from Michele Borba’s book - The Big Book of Parenting Solutions: 101 Answers to Your Everyday Challenges and Wildest Worries