Over the course of a long document, you will use pronouns like it and they frequently, and these pronouns will have many different meanings. This is fine. What isn’t fine is using the same pronoun to refer to two different antecedents within a sentence or a short passage:

Gordie and Horace were jamming, trying to work out the chorus to a new song. They could hardly be heard over their instruments because they were so loud.

The first they refers to Gordie and Horace, and the second they refers to the instruments, so readers might be briefly confused before they figure out the appropriate antecedent. Instead of using the same pronoun to refer to different things in a passage, you can repeat one of the nouns:

. . . They could hardly be heard over their instruments because the instruments were so loud.