Kids here are not allowed to hurt themselves or others and may not break things. That covers almost everything. When they are disobeying, they are reminded of the rule, the next time they are told again and that the next time will result in time out and of course the 3rd time it's time out. Time out is in a corner, 1 min/age, followed by a discussion about what they did wrong, why it's wrong and how they must correct their behaviour and an apology to whomever deserves it. However, if it is an ongoing problem, I may skip the 3 chances rule. If it's something serious that they really know better and had only bad intentions, I don't believe they deserve all the warnings.
Honestly, I haven't had to use a whole lot of timeouts lately.