Many people confuse these words because they associate
apostrophes with possessives. In fact, possessive nouns
require apostrophes, but possessive pronouns do not.
" It's" and " its" are pronouns. Nouns, remember, are the names of
people, places, and things. Pronouns are words that stand
in for nouns.
" It's" is a contraction of " it is."
It's always good to have lots of chocolate.
" Its" is a possessive pronoun. If management doesn't
follow its own policies, what can we expect from the employees?
" It's" and " its" are not the only words commonly confused.
" There" can also be a pointer:
Put the laundry over there.
There are too many cats in this house.