How far out of square is too far

For my on grade shed, I first built a bed of crushed limestone for it to rest on. This will allow drainage and breathing room below the shed. I used some landscape timbers and made a "retaining wall" for the limestone just slightly larger than the footprint of the shed (like 2' around each side). I then filled this rectangle landscape timber area with the limestone.

Then i placed 3 treated 4x4's lengthwise on top of the stone, and build the floor of the shed on top of these 4x4's. This keeps the shed elevated 4" off the ground.

One problem we had though, was critters like raccoons and groundhogs living in that space. To prevent this, I recently added chicken wire attached to the shed, down to the ground, and then across the ground out to the landscape timber. I then covered this ground part with the limestone.

It would depend on soil type and the load on the foundation. As a very rough rule of thumb, the soil actively supporting a foundation spreads at a 45 degree angle downwards from the outer lower edges of the foundation. You should be able to dig outside this section with impunity. If you encroach upon it, if you only excavate something like 15 foot sections at a time, assuming the wall is longer than this, you shouldn't encounter any issues unless the foundation is extremely heavily loaded, such as supporting a large concentrated load.

When backfilling, be sure the soil within the support prism is very well compacted, but be careful not to collapse the pipe.