The words its and it’s are often confused and misused. But the rules are quite simple.
One word, its, is the possessive form of the word it. This word is an adjective (some might want to call it a possessive pronoun, but it acts like an adjective). Use this form when indicating ownership to a previously specified subject. Some examples: “The movie had its moments, but mostly I was bored.” “The mangy dog licked its mud-covered privates noisily.” “While outwardly expressing shock at the profanity in her student’s essay, Ms. Hannerty was secretly quite proud of its ingenuity.”
The other word, it’s, is usually a contraction of the phrase it is, and is thus a combination of a noun (subject) and verb. Some examples: “It’s a small world, after all.” “Damn it, Jim, it’s just a machine!” “I can’t tell if the timer is working properly, but it’s quite apparent that this bomb is unstable. Jump!”
It’s can also be a contraction of it has, where the word has is part of a verb in the present perfect tense. Example: “It has been a bloodbath” could also be phrased “It’s been a bloodbath.”
We’ll get into other pronouns, as well as the use of apostrophes, another time.