There are many different types of electrical boxes. Some are used as outlets, while others are used to hang light fixtures. One thing they all have in common is they are used to house and connect wires. The knockout is a part of an electrical box that is designed to be punched out. The small round hole that is left is used to run electrical wires in and out of the box.
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Determine which of the knockouts you need to use to run the wires in and out of the box. It is always best to run a wire straight into a box. If there is no knockout that will allow for a straight run, then choose the one that will give you the smallest angle in the wire. Angles will eventually cause copper wire to degrade, especially if the wire has to be taken out and put back in.
Place the slotted end of a screwdriver against the knockout, with the tip of the screwdriver pointing away from you.
Strike the handle of the screwdriver with your hammer. The knockout will then fall out and can be discarded.
Turn the knockout if it has a slot in it. Most knockouts are meant to be punched out, but there are a few that screw out. If you observe a slot in it, simply insert your screwdriver and turn it out.