Firstly, you may want to have an animation play when the player punches and there are a couple of ways to make the script be more efficient. Implementing a debounce between punches, and such. For the damage, it would be ideal if you fire an event instead of handling in that local script.
You may want to look through some tutorials and possibly even some devforum threads, they provide adequate information that help you create systems.
How to make this punching script deal damage - Scripting Support - DevForum | Roblox
Fyi; that may need configuring to make it work with a tool.