How Long can a Workflow be Active on a Record?

I have customers that automatically renew every year.  The process initiates with a Sales Order.  Then, upon renewal or cancellation (which is Marked on the Customer Record) I need a workflow to Create Record.

Which is a best practice structure?
1) Initiate on Sales Order > Workflow Remains Active > At Year 1 an Action Create Record occurs and the record remains in the workflow > When the Customer Record is Marked Cancelled then an Action Create Record occurs and the record exits the Workflow.  This could be years before cancel occurs.

or

2) When a field on the customer record indicates that 1 year has passed, then a workflow is deployed on the Customer record an Action Create Record occurs and the record exits the workflow.  If Cancelled is marked on the Customer record, then a workflow is deployed on the Customer record an Action Create Record occurs and the record exits the workflow.