We provide a generalized discussion of tidal evolution to arbitrary order in the expansion of the gravitational potential between two spherical bodies of any mass ratio. To accurately reproduce the tidal evolution of a system at separations less than 5 times the radius of the larger primary component, the tidal potential due to the presence of a smaller secondary component is expanded in terms of Legendre polynomials to arbitrary order rather than truncated at leading order as is typically done in studies of well-separated system like the Earth and Moon. The equations of tidal evolution including tidal torques, the changes in spin rates of the components, and the change in semimajor axis (orbital separation) are then derived for binary asteroid systems with circular and equatorial mutual orbits. Accounting for higher-order terms in the tidal potential serves to speed up the tidal evolution of the system leading to underestimates in the time rates of change of the spin rates, semimajor axis, and mean motion in the mutual orbit if such corrections are ignored. Special attention is given to the effect of close orbits on the calculation of material properties of the components, in terms of the rigidity and tidal dissipation function, based on the tidal evolution of the system. It is found that accurate determinations of the physical parameters of the system, e.g., densities, sizes, and current separation, are typically more important than accounting for higher-order terms in the potential when calculating material properties. In the scope of the long-term tidal evolution of the semimajor axis and the component spin rates, correcting for close orbits is a small effect, but for an instantaneous rate of change in spin rate, semimajor axis, or mean motion, the close-orbit correction can be on the order of tens of percent. This work has possible implications for the determination of the Roche limit and for spin-state alteration during close flybys.