What is a time out?
When your child is doing something that endangers themselves or others, through their actions and behaviour. Time-out sends them away from the trouble spot, and into an area such as a room, chair, quiet corner, hallway, crib, or playpen. It's best used with children aged 2 to 12 years. 

How should you do time out? 
• Don't give endless warnings and empty threats. 
• Don't shout. 
• Time-out should occur in a safe but non-interesting spot. that means, not interaction with other kids, no tv and includes no interaction with you , the parent.
 • If the child refuses to go into time-out - lead mby the hand to the timeout area.
• When putting the child in time-out, briefly explain what they have done and assoicate it with the time out. A simple phrase such as “No hitting” is enough. Do not lecture and do not spank. Time-out is not the time for teaching or preaching. 
• Do not negotiate with a child in time-out. Completely ignore him, even if he shouts, bangs or apologizes. 
• When time-out is over, it is over. Create a fresh start by offering a new activity. Don’t discuss the unwanted behaviour, just move on. 

How long should time-out last?
Time-out should last 1 minute for each year of your child's age. It should not last for more than 5 minutes. Use a kitchen egg timer. Make sure you put it where your child can see and hear it and you can hear the alarm too. 

If they leaves time-out, put them back quickly and reset the timer. This teaches her that you mean what you say. Be consistent. 

What about other children?
If your other children touch the timer, or tease their brother or sister in time-out, they should be also placed in time-out. 

How does time-out end?
Make it clear that you are in control of when time-out ends. Go to your child's corner and say, "Time-out is over. You can get up now." Clear the air. When time-out is over, it's over. 

If your child repeats the behaviour that led to the time-out in the first place, repeat the whole process. If used properly, time-out will eventually work.

Remember, your child should know that time-out is directed toward the their misbehaviour not themselves as a person. It's important not to hurt your child's self-esteem by instilling shame, guilt, loss of trust, or feelings of abandonment.
 

Source/Reference: 
1-2-3 Magic: Training your children to do what you want (120 min.). 
 

This information should not be used as a substitute for the medical care and advice of your physician. There may be variations in treatment that your physician may recommend based on individual facts and circumstances.