Don't panic. Your yorkie is still very young. 8 weeks is entirely too young to have him be away from momma and his littermates. but anyway, now he's home. You say he's only 12 weeks now, so you've only been training for a month. This is just the beginning. It takes time and patience. Most likely he does not even know this is now his forever home. Give him time. Most yorkies don't get it until about 6 mos.
Do you have an ex pen? If you don't want him in a crate all day, get an ex pen, have his bed, food, toys on one side, pad on the other. Most dogs will not want to sleep and play near where they go pee and poo.
I do agree with you, you shouldn't have swatted him on the butt. A stern no and a finger pointing to it, he will know. When you correct, use a firm tone of voice. When praising, use a very high friendly voice. They will understand.
ETA: btw welcome to YT!
__________________  The T.U.B. Pack! Toto, Uni, & Bindi
RIP Lord Scrappington Montgomery McLimpybottom aka El Lenguo the Handicapped Ninja 10-12-12 
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