I think you realize what hitting will do to your yorkie - and while I don't agree with it - it really can turn a dog submissive and may make the problem with peeing worse....
GOOD LUCK with your trainer - it sounds like you made a good decision - and I totally agree with LOTS OF PRAISE - my Chanel is 4 now and still races to me for a kiss after she does her 'bidness' outside - it can take some yorkies a long time to 'get it' but when they do - they usually are pretty proud of themselves....So Yes - throw a parade when he goes where you want....
time and patience and training will help way more than the newspaper.