Shih-Tzu Training

Question
In my house we have two Shih-Tzu's.  One's a 5 year old, and the other a new 1 year old.  We don't know the best way to stop the younger one from peeing in the house. Our older one is trained (the one I trained, mind you..) But my roommate thinks that if we catch the younger one peeing in the house, we should hit him, yell at him, and throw him outside.  

I think we just need to tell him a stern 'NO' and take him outside, and if he goes out there, reward him.

Right now he's still having a few accidents (I think it's because of the conflicted training he's getting).  Which training method do you suggest?

Answer
When you are around you need to keep a close eye on the dog. Use closed doors or gates to keep it in the same room as you are, and perhaps as I do, a short chain fastened to the computer desk. If you catch it in the act, give it a sharp ''Ah, ah, ah!'' and take it out. When you can't watch it, crate it.

A dog that has not been crated since it was little, may take some work. Start out just putting its toys and treats in the crate. Praise it for going in. Feed it in the crate. This is also an easy way to maintain order at feeding time for more than one dog.