It's and Its

its /ĭts/ pn. poss. A third person neuter possessive pronoun meaning of it or concerning it.

Proper use:
Right: "Never judge a book by its cover."
Wrong: "Its not polite to stare."
Wrong: "Its been a long time!"

it's /ĭts/ contraction. A contraction of it and is or has.

Proper use:
Right: "It's not polite to stare."
Right: "It's been a long time!"
Wrong: "Never judge a book by it's cover."