Concerning the usage of "its" verses "it's", it is really just a question of when to use a possessive pronoun and when to use a contraction.
Always remember "It's" is a contraction, used when you want to say "it is" or "it has". "Its" without an apostrophe is a possessive pronoun that modifies the noun (or that answers the question "Whose?").
For instance, you would write:
IT'S
"It's" raining for "It is" raining. It's is a contraction of it is. (The apostrophe in the first sentence replaces the "i" in "is".)
It's been a great year. (It's is a contraction of it has.)
ITS
The dog left its muddy prints on the clean floor. Whose prints? "its" (Possessive pronoun, needs no apostrophe.)
This trick has served me well. If, however, you still are confused just remember that "its" is a possessive pronoun and functions in the same manner as the following possessive pronouns: his, hers, its, yours, ours, theirs.
For example:
WRONG - The red car is our's.
RIGHT - The red car is ours.
Think you have it now? Find out by taking this quiz:
http://esl.about.com/library/quiz/bl_its.htm
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