Hiring a Nanny

What are some things I need to definitely consider when hiring a nanny? I am a second time mom, but the nanny will be part time (20-25 hours a week) just for the infant, while DD1 is at preschool. I'm starting the search and so far trying to get recs from DD's school, other moms, etc before going to a service. Option 1, for example, is a past teacher that DD has had before so we already know her (somewhat).

 What are the biggest things to consider and ask about when screening ? What should I make sure to cover in an interview? Do you have a contract? What do you do about days off for the nanny?

The taxes part is complete over my head but I'm looking into an online service for that. Any help from other moms who have done this is greatly appreciated!!!