I think it's fine to interrupt the puppy in the process, I'll say "ah ah" and clap my hands loudly if I see puppy start to squat, and then scoop him/her up and get them outside to finish doing their business. If I'm too late and s/he's already finished (shame on me for not paying closer attention!), then there's no point in yelling at the puppy. Punishment after the fact does nothing to teach the puppy that what s/he did is wrong, and an unintended consequence can be that puppy is afraid to potty when you're around, either inside OR outside, which will set back the housebreaking process. Much better to watch the puppy closely (and crate when you can't), take him/her out very frequently, and then big praise and a treat when s/he goes outside. The more you can prevent accidents in the house and reinforce pottying outdoors the faster puppy will learn.